China Cosco to sell assets as it piles up more losses
China Cosco, a shipping firm trying to avoid a third straight year of losses in order to retain its listing on the Shanghai Stock Exchange, saw losses widen in the third quarter of this year.
The country's biggest shipping firm posted a net loss of 2 billion yuan (HK$2.5 billion) for the first three quarters of the year, compared with a 990 million yuan loss for first half, according to an exchange filing yesterday. That means it doubled its first-half losses in just three months.
While the company said its shareholders had already approved its plan to sell three commercial properties - which could add 3.67 billion yuan of profit to its books before the end of the year - China Cosco's container and dry-bulk business must not lose more than 1.67 billion yuan in the fourth quarter if the company is to return to the black this year.
A firm that reports three consecutive years of losses is liable to be delisted from the stock exchange.
According to the filing, while the number of boxes it handled increased 7.8 per cent in the third quarter, it generated 7 per cent less in revenue than a year ago, reflecting a falling freight rate. The volume of its dry-bulk business fell 9.5 per cent during the same period.
As traders and shipping lines report a rebound in business ahead of the Christmas season, analysts are cautiously optimistic that China Cosco may be able to avoid being delisted, although it will take time for it to see a real turnaround.
The company has disposed of its logistics business, stakes in a container manufacturer and office buildings this year in order to return to profitability. Without those gains, it would have seen a loss of 5.76 billion in the first three quarters of the year.
China Cosco is set to add five new container vessels to its 178-strong fleet, boosting its current capacity by nearly 10 per cent.