News Content

Cosco Shippping Holdings warns of US$1.4b net loss in 2016

COSCO Shipping Holdings, a subsidiary of state-run ocean carrier China Cosco Shipping Corp., has issued a profit warning on expectations that it will report a net loss of US$1.44 billion for 2016 with low freight rates, rising costs and weak demand affecting the container line's earnings.

In a notice filed with the Hong Kong Stock Exchange, the company said it expects to record a net loss attributable to equity holders for 2016 of approximately CNY9.9 billion (US$1.4 billion) in contrast to the CNY283 million profit it recorded for 2015.

However, the company did say that in 2016, it "had gradually achieved synergies generated from its business restructuring, and the performance of the group significantly improved on a quarterly basis."

The shipping company does expect to have earnings before interest and tax (EBIT) of approximately CNY700 million for the fourth quarter of 2016 "without taking into account the net loss incurred by demolition of vessels."

The company said that in 2016, "With slow growth in global container shipping demand and oversupply of shipping capacity, the international shipping market still lacked solid improvement in addressing the imbalance in supply and demand.

"The growth of revenue generated from the container shipping business segment of the group was lower than the growth of the container shipping volume, and the increase in revenue was less than the increase in costs.

The company said that last year, it incurred a net loss of CNY2.43 billion due to the disposal of its 100 per cent equity interest in China COSCO Bulk Shipping (Group) Co., Ltd. and 100 per cent equity interest in the container leasing company Florens Container Holdings Ltd.

It also suffered a loss of CNY1.053 billion from the decommissioning, demolition and disposal of vessels. Furthermore there was a loss of CNY762 million on bulk shipping before it sold the bulk shipping business, American Shipper reported.