Cosco Blame it on Weak Shipping Industry
The global economic recovery was slower than expected and the overcapacity problem in the shipping industry remained serious, in the first half of 2015, says COSCO International Holdings.
This drove stable business volume to the Company’s business segments which serve for operating vessels. On the contrary, the Company continued facing pressure from the clients who tightened cost controls due to the weak shipping industry.
Amid the changing business environment and challenging market conditions, COSCO International achieved satisfactory results in the development of new non-COSCO customers and new products by adjusting its business strategy, leveraging on its expertise and experience in the industry and acute responses to the market changes, so as to minimise the negative impacts brought by the depressed shipping market.
The net profit of the Company achieved stable growth. It has posted a 5 percent rise in interim net profit to HK$200.3 million from a year back while revenue sank 36 percent to HK$3.03 billion as earnings fell from selling marine fuel.
Earnings per share hit 13.07 HK cents and an interim dividend of 7 HK cents was proposed. Gross profit slipped 13 percent to HK$368.61 million due to a decrease in commission income. But gross profit margin rose 12 percent from 9 percent a year earlier. As at June 30, COSCO International had a net cash position of HK$6.06 billion.
Managing director Xu Zhengjun said the shipping market in the second half would continue to suffer from an imbalance in supply and demand.
In the second half of 2015, the global economy will still grow at a slow pace. It will be difficult for foreign trade in China to resume rapid growth as it may be hindered by the expected increase in the interest rate in the United States and the slow economic growth in China.
The shipping market will still be suffering from an imbalance in the supply and demand of shipping capacity and depressed freight rates. It is expected that shipowners will continue to strictly control cost and the operation of the shipping services will be under severe pressure. However, the global economic trend will be better than that in the first half of the year.
Strategic plans such as "Made in China 2025" and "One Belt and One Road", construction of free-trade zones, state-owned enterprise reforms and a series of policies promoting the development of the shipping industry promulgated recently by the PRC government are all favourable to laying a solid foundation for sustainable and healthy development of the Company.
