SITC earnings soar on higher freight rates

PUBLISHED : Thursday, 28 October, 2010, 12:00am
UPDATED : Thursday, 28 October, 2010, 12:00am

SITC International Holdings, a mainland shipping and logistics company which listed in Hong Kong last month, saw a 334 per cent year-on-year growth in net profit for the first nine months on higher freight rates and shipping volume.

Thanks to the recovery in global trade and the ever-growing export volume from the mainland, the company saw its net profit increase to US$88.6 million in the nine months from US$20.4 million for the same period last year. The net profit in the first three quarters has already met 81 per cent of the projected US$109 million net profit for the full year.

Net profit margin surged to 13.7 per cent in the period from 4.2 per cent on higher freight rates.

The company plans to expand its fleet by acquiring 15 to 25 vessels by 2013, which will be funded by the proceeds from the initial public offering, Yang Xianxiang, chief executive of SITC, said.

Responding to the growing number of production lines being moved from the mainland to Vietnam, the company has kicked off investment in a logistics park in the country to be opened next year. SITC is also looking for potential logistic park facilities in Ningbo, Tianjin and in Zhejiang province.

Sales of the company increased 34 per cent to US$647.4 million in the first nine months from US482.2 million a year earlier. Gross profit increased nearly 200 per cent to US$124.7 million.

The rise in fuel costs has been offset by lower vessel charter rates on the container shipping division, enabling the gross profit margin of the company to rise to 19.3 per cent from 8.8 per cent.

The company incurred US$3.5 million of other expenses and losses in the period, primarily due to the closing out of the 10-year derivative financial instrument with HSBC, compared with US$100,000 losses in the same period last year.

Shares in the company dropped 0.24 per cent to HK$4.11 yesterday.