COSCO Pacific Hitting Its Stride

COSCO Pacific Limited has announced the unaudited condensed consolidated results of the company and its subsidiaries for the six months ended June 30, 2014.

•  The Group’s revenues rose by 11.4%. Revenues from the terminals business rose by 18.9%, and revenues from the container leasing, management and sale businesses rose slightly by 2.1%;
•  Gross profit fell by 2.9%. Gross profit from the terminals business grew during the period. However, rental yield from the container leasing business remained low during the first half of 2014. Moreover, as the sale prices for old containers were still under pressure and the disposed returned containers had a higher net carrying value, the overall gross profit from the container leasing, management and sale businesses declined.
• Profit from the terminals business increased by 17.5%, primarily driven by the growth in container throughput. Equity throughput climbed 13.2%, while total throughput increased by 10.1% to 32,481,568 TEU.
• Profit from the container leasing, management and sale businesses fell by 30.2%. The overall average utilisation rate remained steady at 94.8% (corresponding period of 2013: 94.5%). The fleet size of containers increased by 3.3% .

Looking to the second half of 2014, despite the great downward pressure on the world economy, developed economies will continue to accelerate recovery, which will in turn boost global trade and industrial production.

In the second half of the year, the Group’s container throughput is expected to grow steadily, giving a boost to terminals business profits. In addition, the Group said it would continue to strive to enhance marketing efforts for Xiamen Ocean Gate Terminal with the aim of shortening the ramp-up period with relatively high costs.

With regard to the container leasing, management and sale businesses, container leasing experienced an increase since the second quarter of 2014 following the peak season of the shipping industry, contributing to an improvement in the utilisation rates of the container leasing industry.

It is expected that the demand for containers will increase during the second half of 2014, but the operating environment will remain highly competitive and the rental yield is likely to remain low.

Meanwhile, the fall in sale prices and the high net carrying value for returned containers will continue to erode the profit margin of the disposal of returned container business.

“The Group will continue to lower the container inventory on the ground and further increase the utilisation rate. In addition, the Group will also accelerate the sale of returned containers in order to facilitate the inflow of capital for revenue enhancement and cost reduction,” COSCO Pacific Limited said.