Cosco posts weaker 2018 results for tanker, box and financing operations

Date: Monday, April 1, 2019
Source: TradeWinds

Chinese state conglomerate saw profitability eroded by weaker market conditions amid uncertainty.

China Cosco Shipping, China’s largest shipping conglomerate, saw weaker profitability in its main shipping and financing operations last year amid macroeconomic uncertainties.

Annual results of the state giant’s listed units showed its container shipping and port businesses were kept in the black by the acquisition of Orient Overseas (International) Ltd (OOIL), while its tanker unit rode on a fourth-quarter earnings recovery.

Box unit Cosco Shipping Holdings recorded net profit of CNY1.23bn ($183m) on revenue of CNY 121bn in 2018, meeting earlier expectation.

“The company took advantage of the positive factors arising from the acquisition of OOIL to overcome the adverse market factors,” Cosco Holdings said.

Having completed the acquisition in July, the company saw container shipping volume increase by 29% from the 2017 level to 18.4 million teu last year. Its port unit recorded 120 million teu, up 21% on year.

Cosco Holdings posted net profit of CNY 2.66bn on revenue of CNY 90.5bn in 2017. The better bottom line mainly resulted from lower bunker prices.

Tanker business below expectation

Cosco Shipping Energy Transportation (CSET), which controls its parent group’s oil and gas shipping assets, recorded net profit of CNY 74.7m for 2018 in its audited results compared with CNY 1.77bn in 2017.

This came after CSET expected its net profit to have ranged between CNY 80m and CNY 180m in its preliminary results.

Revenue at CSET rose to CNY 12.1bn in 2018 from CNY 9.5bn in 2017 amid fleet expansion, but the company’s bottom line was hurt by weak spot tanker earnings between January and September last year.

Focus on leasing

Cosco Shipping Development, Cosco’s financing arm, posted net profit of CNY 1.38bn on revenue of CNY 16.2bn last year. In 2017, the company recorded net profit of CNY 1.46bn on revenue of CNY 15.9bn.

“In 2018, capital markets saw significant volatility amid tightening financial regulatory environment and intensifying global trade frictions,” chairman Sun Yueying said.

“Facing the complex environment and numerous challenges, the company was proactively forging ahead by improving its operation and management capabilities and overall competitiveness.

“[We] made bold innovations and developed finance lease business in major transportation sectors such as expressways and terminals in an active effort to explore new leasing markets.”

As of end-2018, CSD's vessel leasing unit owned 90 boxships totaling 629,500 teu, four 64,000-dwt bulkers and more than 80 LNG vessels, heavy crane vessels and various other ships.

 

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