Income grows 2.4pc at bulk shipping firm

PUBLISHED : Friday, 30 March, 2007, 12:00am
UPDATED : Friday, 30 March, 2007, 12:00am

China Shipping Development, a mainland dry bulk and crude oil carrier, said last year's profit rose 2.4 per cent as volume growth helped ease the impact from falling freight rates and rising fuel cost.

Net profit rose to 2.75 billion yuan from 2.69 billion yuan a year earlier, in line with market expectations. Sales rose 12 per cent to 9.8 billion yuan.

China Shipping moved 14.4 per cent more crude oil last year, giving it revenue of 5.4 billion yuan, and 4.7 per cent more coal for an income of 3.5 billion yuan.

However, because of a drop in freight rates and an increase in fuel cost, its profit margin for coal and oil transport fell by three to four percentage points to 34 per cent.

China Shipping expects the Baltic Dry Index, a measure for dry bulk freight rate, to stay firm this year amid strong demand for iron ore, coal, steel and cement in the mainland.

The company said it would explore new markets for coal and iron ore imports and lease more vessels.

The shipping firm forecast additional demand for 30 million tonnes of coal every year up to 2010. It said it had secured contracts to transport coal for this year at a slightly higher rate than last year.

It has formed a strategic alliance with China Shenhua Group, the mainland's largest coal producer.

To meet demand for coal transport for Shenhua's power plants in the coastal areas, China Shipping will increase the tonnage of its fleet to one million tonnes by 2010 from 400,000 tonnes at present.

The oil tanker unit, however, will continue to be under pressure, as rates are likely to soften this year since global supply growth is expected to exceed demand by 3 per cent, according to an estimate by shipping agent Clarkson.

Still, China Shipping plans to add six tankers with total capacity of 542,000 tonnes to its 3.4 million tonnes of capacity.

Operating cost at the company surged 20.5 per cent to 6.2 billion yuan last year, including 2.6 billion yuan in fuel cost, an increase of 33.4 per cent.

Port charges increased 21 per cent to 585 million yuan, while salary expenses dropped 18 per cent to 503 million yuan.

It also booked depreciation cost of 918 million yuan, up 5.5 per cent.

China Shipping proposed a final dividend of 30 fen a share and a special dividend of the same amount, from its earnings per share of 83 fen. It also paid a dividend of 30 fen in 2005.