Sinotrans to streamline assets as economic outlook worsens
Shipping company aims to eliminate overlaps with parent firm as part of cost-cutting drive
Sinotrans is consolidating more than 4 billion yuan (HK$4.89 billion) worth of assets in its parent company to cut costs as the economic outlook deteriorates.
Net profit for the freight forwarder and shipping company slipped 11 per cent year on year to 390 million yuan in the first half on 23.16 billion yuan of sales, dragged down mainly by widening losses in its container shipping division. Losses in the marine transport division overall rose to 137.1 million yuan from 82.4 million yuan a year ago as shipping rates fell.
The consolidation, which is expected to eliminate competition between the listed company and parent Sinotrans Group, started this year and will encompass businesses ranging from shipping and freight forwarding to warehousing.
"In the next two to three years, we will inject the parent's unlisted businesses into Sinotrans," company president Zhang Jianwei said yesterday. The unlisted assets were valued at up to 5 billion yuan and located across the country, he said.
When Sinotrans listed in 2003, some loss-making units were left out of the listed company. Some of these units, such as warehousing, have since turned around and are eligible for inclusion, according to management.
"In the beginning, most of the integration will take place at the operational level," Zhang said.
"The units will be acquired when we are financially prepared to do so."
Regulatory restrictions have hindered the integration plan. Chang Jiang Shipping Group Phoenix, a Shenzhen-listed domestic shipping company that merged with the Sinotrans Group two years ago, is one unit that Sinotrans has been looking to acquire. But as Sinotrans was not registered on the mainland, it was barred from the domestic shipping business, Sinotrans chairman Zhao Huxiang said.
The firm also wants to boost its domestic freight forwarding business from 15 per cent of its overall income amid booming domestic consumption.
No interim dividend was declared. Shares in the company fell 1 per cent to HK$ 1.06 yesterday.