OOIL profit down, but box unit revenues increase 5pc to US$2.8 billion

HONG KONG's Orient Overseas (International) Limited (OOIL) posted a 33 per cent decline in first half profit attributable to shareholders to US$116.7 million despite a five per cent increase in revenue from its principal container operation to $2.9 billion.

OOIL operating profit shrank 26 per cent to $140 million. Its container unit OOCL, the world's 11th largest carrier, suffered a one per cent fall in revenue per TEU, but this was offset with a 6.1 per cent increase in liftings to 2,587,260 TEU in the first half.

"OOCL's positive operating margin for the first half was adversely impacted by the unexpected increase in bunker fuel, but the recent fall in the price of crude oil, if it holds, should see an improvement. But margins will remain volatile, and likely thin, until supply and demand rebalance," said OOIL chairman CC Tung.

OOCL's transpacific trade handled a total of 632,300 TEU in the first six month, up 5.7 per cent year on year. Asia-Europe liftings were also up 1.3 per cent to 426,195 TEU; transatlantic liftings experienced the highest two-digit growth of 13.5 per cent with 212,669 TEU, and intra-Asia/Australasia routes handled 1.32 million TEU, up 6.7 per cent.

Said Mr Tung: "The first half of 2012 has been challenging with very low market freight rates at the start of the year, low demand growth on the east-west trades, and a spike up in bunker fuel prices in early January. Fortunately there has been a marked improvement in freight rates, particularly on the Asia-Europe services, to offset the low growth in demand on the east-west trades.

"While facing low demand growth, the industry has had to absorb over 110 new containerships in the first half. The industry's ability to absorb and judiciously deploy capacity will be key to stability for years to come," he said.

Said CFO Kenneth Cambie: "OOCL has been fortunate during this period of low demand growth in not having any newbuild vessels. The first of our new mega 13,200-TEU vessels, which are expected to deliver significant operating cost efficiencies, will arrive next year."

Said Mr Tung: "Prospects of a strong third quarter, the traditional peak season for container shipping, have dimmed as a result of the poor economic data from the major consumer markets. Despite limited ordering of new vessels over the last 12 to 18 months, the industry needs to absorb an estimated 2.4 million TEU of new-building capacity, which is about 15 per cent of the current global capacity, over the next 18 months."