China Shipping earnings rise 44pc on higher freight rates

PUBLISHED : Saturday, 28 April, 2007, 12:00am
UPDATED : Saturday, 28 April, 2007, 12:00am

China Shipping Development, the mainland's leading coal and oil shipping company, said first-quarter profit rose 44 per cent on higher freight rates and after increasing its fleet size.

Net profit rose to one billion yuan, 31.5 fen per share, in the first three months from 727 million yuan, 21.9 fen per share, in the same period last year. Sales increased 20 per cent to 2.7 billion yuan

China Shipping benefited from the delivery of 42 dry bulk vessels from its parent company, China Shipping Group, which helped it to take advantage of freight rates that have surged on demand for raw materials in the mainland and congestion in Australian ports.

The acquired vessels, bought for two billion yuan, brought an additional 1.4 million dead weight tonnes of capacity to the shipping company.

The average Baltic Dry Bulk Index, a measure of rentals of dry bulk vessels, was 4,669 points in the first quarter, 91 per cent higher than a year earlier.

The index, which on April 26 surged to a record high of 6,192 points, has risen 40 per cent this year.

Operating profit rose 37 per cent to 1.15 billion yuan, also boosted by a 14 per cent increase in the contract price for thermal coal.

The company gained from stringent cost control in the quarter, with operating cost increasing 7 per cent while transport volume rose 24.5 per cent.

The company's first-quarter earnings accounted for 37 per cent of last year's 22.75 billion yuan 12-month net profit, up 2.4 per cent from the previous year.

China's economy grew at 11 per cent in the first quarter, boosting demand of raw materials such as iron ore and coal in Asia.

The mainland has turned into a net importer of coal this year from a net exporter previously, buying the fuel from long-haul destinations such as Indonesia and Australia. The country previously exported coal to the more near-at-hand Japan and South Korea.