Cosco (Hong Kong) Group

Cosco International annual net profit drops 6.5 per cent

PUBLISHED : Wednesday, 23 March, 2016, 11:04am
UPDATED : Wednesday, 23 March, 2016, 7:14pm

Cosco International, the shipping services subsidiary of China’s largest shipping company, said its 2015 net profit declined 6.5 per cent to HK$336 million from a year earlier, owing to sluggish demand and increasing price competition.

Revenue fell 21 per cent to HK$6 billion, mainly due to the drop in international crude oil prices that affected the company’s marine fuel business. However, the company’s gross profit margin rose to 11.5 per cent from 10.6 per cent in 2014.

The company’s core business includes ship trading services, marine insurance brokerage, distribution of marine equipment and parts, production and sale of coatings, and trading and supply of marine fuel and related products.

“Looking forward to 2016, the global economy will experience a deepening adjustment with sluggish

recovery. The growth of international trade will slow and the financial market and commodity markets are expected to fluctuate. The global shipping market will remain depressed,” Cosco International’s managing director Liu Xianghao said.

In its ship trading agency segment, its wholly-owned subsidiary COSCO Ship Trading handled the sale and purchase of a total of 45 second hand vessels last year, compared to 82 vessels in 2014. It received 30 new build vessel orders during the year, down from 58 orders a year before.

The segment’s revenue narrowed 34 per cent to HK$85 million.

The company also incurred foreign exchange losses of HK$42 million due to yuan depreciation.

During the results briefing, Liu said shipping companies have continued to expand their container fleets, which adds up to a upbeat portrait for the development of the company’s business.

Following the restructuring of China Ocean Shipping Group (Cosco) and China Shipping Group, COSCO International’s controlling shareholder, the newly-established China COSCO Shipping Corporation has emerged as the world’s largest shipping conglomerate with a fleet of 1,114 vessels totalling 85.32 million dead weight tonnes.

Liu said there are no plans to restructure Cosco International.

The board recommended a final dividend of 9 HK cents per share, down from 10 HK cents in 2014.