COSCO Warns of Loss for Year in Rough Market
China COSCO Holdings , owner of the world's fourth-largest container shipping fleet by capacity, warned of a loss for the year on Friday as it failed to capitalise on a market recovery in the third quarter.
Slowing global trade had saddled the sector with a glut of container ships, pushing freight rates below cost in some cases and inflicting heavy losses, until the collapse of South Korea's Hanjin Shipping in August caused a supply shock that allowed ship owners to push up rates.
But COSCO, among the most indebted of the global shipping firms, said its third-quarter losses widened to 2.01 billion yuan ($297 million), although they were less than in the second quarter.
It said the international market still lacked solid improvement to address the imbalance in supply and demand.
"The company grasped the opportunity of market recovery in the third quarter and endeavoured to restore the freight rates at (the) appropriate time," COSCO said.
"(But) the depression in the container shipping market persists and it is anticipated that the accumulated net result for the year may turn into losses," it said.
In the three months to end-September, COSCO's container shipping business shipped 4.5 million twenty-foot equivalent units (TEU), representing a year-on-year increase of 61.1 percent.
COSCO also said that it received a government subsidy of 307.6 million yuan during the period, its largest so far this year. The company has posted heavy losses this year due to a fall in government subsidies for scrapping ships and the sale of its dry bulk business.
Throughput at its container terminal business rose 4.72 percent to 24.2 million TEU.
COSCO's Hong Kong listed shares closed 1.45 percent lower on Friday, against a 0.77 percent fall in the Hang Seng Index .
Separately on Friday the company's sister unit, Cosco Shipping Energy Transportation which focuses on liquefied natural gas and oil shipping, posted a 67.4 percent rise in January-September profit.
(By Brenda Goh)
