Cosco Pacific will have to rely on exceptional gains again to keep an even keel on profitability as throughput growth at mainland terminals slows.
If the first two months of the year are indicative of things to come, plain sailing is hardly in sight. Reflective of a downturn in the United States economy as well as the havoc of the worst snowstorms in 50 years, mainland ports posted a decline in exports during that period.
Shanghai and Shenzhen ports still saw some expansion in throughput, but at less than 4 per cent year on year, compared with 20.5 per cent and 14.2 per cent respectively last year.
But for the country's fifth-largest container terminal operator as well as its second-largest container leasing company, disposing of assets to lift profit is not a new tack.
Last year's 47 per cent rise in net profit to US$427.8 million was mainly driven by exceptional gains. Cosco Pacific disposed of its entire stake in Chong Hing Bank for US$268.5 million, making a gain of US$90.7 million in the transaction. It also wrote back some US$55.2 million from the put option issued to shareholders of China International Marine Containers (CIMC). The two exceptional items accounted for about 30 per cent of last year's earnings.
Similarly in 2006, the company sold some 600,000 20-foot equivalent units to the market and booked a one-off gain of US$84.45 million, contributing 29 per cent to the net profit that year.