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.

China COSCO posts 255pc loss of US$1.66 billion, boxes lose $1 billion

HONG KONG listed China Cosco Holdings has posted a loss of CNY10.5 billion (US$1.66 billion) in 2011, down 255 per cent year on year from a profit of CNY3.78 billion in 2010. Revenues were also down 12.3 per cent to CNY84.64 billion in 2011.

Looking ahead, the company said: "On one hand, weaker consumption in developed countries will slow growth of global trading volumes; on the other hand, overcapacity will remain unfavourable to the shipping market because of a large amount of new build vessels to be delivered."

The company's shipping line, Cosco Container Lines, and related businesses experienced a loss of CNY6.35 billion with a total throughput of 6.91 million TEU, up 11.2 per cent year on year. But the division's revenues were down 10.7 per cent to CNY41.4 billion.

But revenues for its domestic logistics division, comprising some forwarding and ship agency business, grew about 15 per cent to CNY17.74 billion from CNY15.21 billion in 2010, attributing to a profit of CNY626.5 million.

Its terminal operations, including all major Chinese ports, plus facilities in Greece, Suez Canal, Singapore and Antwerp, posted a profit of CNY492.7 million due to a growth in both throughput and revenues.

Regarding fleet development in 2011, six containerships with a total capacity of 69,458 TEU delivered, bringing the fleet to 157 operated containerships with a total capacity of 667,970 TEU and representing an increase of 8.8 per cent year on year. Thirty-two vessels were on the company order book, totaling 244,168 TEU at the end of 2011.

The company has 28 new vessels scheduled for delivery between 2012 and 2014. The company also expects to receive ten new 4,250-TEU ships and four chartered-in 13,000-TEU vessels this year. Cosco expects to carry 7.3 million TEU this year.

Said the company statement: "Over 80 per cent of the contracts of Pacific routes included terms for the separation of bunker surcharges and freight rates, while bunker surcharges and currency exchange surcharges of Europe Mediterranean routes were adjusted monthly."

The company said it "has raised freight rates seven times and introduced surcharges for Australia routes. Extra risk surcharges and war insurance premium were introduced to routes to Persian Gulf and other hazardous areas."

"More shipping capacity will be allocated to emerging markets and feeder routes to build up an extensive global service network and speed up the recovery of freight rates," the company said.

But it forecast the global demand for the container shipping will maintain steady growth. It quoted Clarkson's February report that the volume will increase 7.7 per cent in 2012, but it would be difficult for the growth rate of the container shipping volume on Pacific routes to exceed five per cent despite the recent partial recovery signal of the US economy, and the Europe-Asia routes will continue to be stagnant due to European debt crisis.

"Since the beginning of 2012, the freight rates of Europe-Asia routes and Pacific routes have been improved and the overall freight rates of in the container market are expected to recover to normal level. Yet, due to the intensifying political situation in Iran, bunker costs will further increase and the cargo shipping in this region will be hindered, and the risk of economy of emerging markets being impacted will increase," said the Cosco statement.

source: shippingazette.com / picture: google.com