Monday, May 7, 2012

China Cosco's loss widens to $428m


China Cosco Holdings’ net loss deepened in the first quarter as the company's dry-bulk business slumped amid a slowdown in the global shipping industry, reported The Wall Street Journal.

The Beijing-based shipping company said its net loss totalled US$428.2 million for the three months ended March 31, according to Chinese accounting standards, compared with a net loss of $79.7 million a year earlier.

Revenue fell 4.6 percent to $2.49 billion from $2.61 billion. The results lend weight to a gloomy outlook for the year made in March by China Cosco chairman Wei Jiafu, who said oversupply and a funding squeeze would continue to dog the global shipping industry.

Wei said at the time that he expected lower rates and the financing squeeze to force weaker competitors to default on their payments or go into bankruptcy.

Pressure has been particularly high on China Cosco's dry-bulk unit, which carries commodities including coal, grain and iron ore. The unit said its first-quarter shipping volume fell 15 percent from a year earlier to 55.6 million metric tonnes.

China Cosco, which has 147 dry-bulk ships under charter and owns 229, last year stopped paying fees on some ships it leased before 2009 from Chinese and Greek ship owners, triggering the seizure of three ships. The company later said it had resumed its payments.

The company said it expects excess shipping capacity to weigh on the dry-bulk unit, forecasting dry-bulk capacity growth of 11 percent this year, higher than an expected four percent rise in demand. China Cosco said that as of March 31 it had orders of 20 dry-bulk cargo vessels totalling 1.9 million deadweight tonnes.

China Cosco's container unit showed a recovery in the first quarter, as shipping volumes rose 20 percent, pushing the unit's revenue up two percent to $1.28 billion. China Cosco, the listed flagship of state-owned China Ocean Shipping (Group), has businesses that include dry-bulk shipping, container shipping, port operations and container construction.