Soft Market Hurts Container Manufacturer

The unstable demand for new containers has restrained the performance of container manufacturer and logistics services provider Singamas Container Holdings Limited, according to the company’s interim results for the six months ended June 30, 2014.

Teo Siong Seng, Chairman of Singamas, said: “Demand for new containers remained soft and production volume was low in the first quarter of 2014, which began to pick up entering the second quarter. However, average selling price was picking up in a slower pace; consequently moderated the Group’s performance.”

What is more, as a result of the decline in the corten steel cost, a major component for producing dry freight containers, the average selling price of a 20-foot dry freight container slipped to USD 2,147 from USD 2,287 for the same period of last year.

Nevertheless, with major world economies showing modest signs of recovery, the forecasted rise in global trade of up to 5% in 2014 according to industry estimates may come to fruition.

With exports from China experiencing a gradual increase, shipping companies will have greater motivation to order new containers so as to either increase their existing container fleet or to replace their old containers.

Furthermore, a larger number of new container vessel deliveries will be made in 2014 and 2015, with world production rising in 2014 when compared to the preceding year.

All of the aforementioned developments could help expedite the container liner industry’s exit from the presently lackluster conditions.

“Demand continues to be healthy for the group’s other products, with orders for dry freight containers filled up to September 2014, which will ensure that the group’s factories will be operating at optimum capacity.

Moreover, we are confident that our offshore container business is set to make further progress, thus leading towards the further diversification of income streams, greater profitability and bolstering of our market position,” Teo said.

The company completed the first batch of offshore containers in May 2014, with three months worth of orders on hand.

Financial highlights:

• Consolidated net profit attributable to owners of the company amounted to USD 13.2 million (1H2013: USD 27.4 million).
• Dry freight containers continued to dominate the company’s manufacturing output.
• Singamas produced 302,852 twenty-foot equivalent units (1H2013: 274,519 TEUs) and sold 296,374 TEUs (1H2013:244,070 TEUs)
• Singamas’ logistics business revenue increased by 19.9%, thanks to the new Qidong depot, which began contributing profits to the segment.
• A total of 1,642,784 TEUs was handled, up from 1,505,447 TEUs in the preceding year.
• Average daily container storage reached 127,625 TEUs compared to 97,630 TEUs in 2013.