China Cosco posts 6.1b yuan profit
China Cosco Holdings, the largest global bulk vessel operator, posted a 6.13 billion yuan (HK$6.84 billion) net profit for the first quarter due to a huge rebound in dry bulk freight rates after China resumed imports of iron ore from Brazil.
Earnings per share were 60 fen, according to a filing with the Shanghai Stock Exchange. No comparative figures were available since it is the first time the company has filed a quarterly report.
Net profit mainly came from the bulk shipping division, which accounted for 87 per cent of its total operating profit last year.
The Baltic Dry Index (BDI), which reflects an average charter rate for bulk vessels, has rebounded more than 50 per cent from its trough in January due to the partial resumption of iron ore trade between China and Brazilian exporters after the two parties reached agreement over prices in February. China imported 15 per cent more iron ore in February and last month year-on-year.
The increase in sales to 28 billion yuan also was the result of strong grain and coal shipments from Australia and Indonesia.
'In the near term, we expect the BDI to trend higher from more cargoes when Australia-China iron ore talks wrap up,' Credit Suisse said.
China Cosco shipped 67.9 million tonnes of bulk cargo in the first quarter, up 7.5 per cent. Iron ore shipping volume increased 16 per cent while coal volume dropped 10 per cent. The shipping conglomerate said last week that it had covered 54 per cent of revenue days of bulk vessels under contract rates, 33 per cent higher than last year.
Cosco Container Lines, a unit of Cosco Holdings, moved 9.3 per cent more 20-foot equivalent units (teus) in the first three months. Sales from container shipping increased 20 per cent to 9.96 billion yuan.
Cosco Holdings said it would increase its capital investment 37 per cent to 23.3 billion yuan this year. Fifty per cent will be spent on dry bulk and container vessels to cash in on the uptrend in the shipping market.
At the end of last year, the company operated 419 dry bulk vessels, totalling 33 million deadweight tonnes of capacity. It also operated a container vessel fleet with a capacity of 435,138 teus.
Separately, Cosco Pacific, 51.5 per cent owned by China Cosco, saw its net profit increase 15.6 per cent to US$65.8 million in the first quarter due to a 22 per cent increase in throughput volume. Earnings per share rose 15 per cent to 2.93 US cents from 2.55 US cents a year earlier.
In the first three months, 10.4 million teus were moved in its container berths, compared with 8.5 million last year. Mainland ports moved 15.6 per cent more containers, while terminal operations in Singapore and Antwerp saw a 38.5 per cent and a 58 per cent increase, respectively. Break-bulk cargo throughput rose nearly 70 per cent to 2.6 million tonnes year-on-year.
Sales increased 13.1 per cent to US$73.56 million on a 21 per cent increase in its container fleet size.