OOIL heads for US$6.4b in turnover

PUBLISHED : Tuesday, 23 October, 2012, 12:00am
UPDATED : Tuesday, 23 October, 2012, 4:19am

Orient Overseas (International) (OOIL) could be heading for a total turnover of around US$6.4 billion this year after the parent of Orient Overseas Container Line (OOCL) reported revenues of US$4.47 billion in the first nine months of the year from its box shipping business.

This was 7 per cent higher than last year and followed a 10.9 per cent rise to US$1.59 billion in container shipping revenue in the third quarter.

Geoffrey Cheng, head of transport research at Bocom International, said revenue from OOCL's logistics business and OOIL's property holdings needed to be included in the total revenue figure. OOCL Logistics generated US$230 million in revenue in the first half of this year, with other OOIL revenue contributing US$14 million.

Estimating the revenue from a weaker fourth quarter and extrapolating these figures put OOIL on course for full-year revenues of about US$6.4 billion. Jon Windham, Barclays Bank's head Asia industrials analyst, has forecast revenues of US$7.2 billion.

OOCL's total container volume climbed 5.1 per cent to 3.95 million 20-foot equivalent units (teu) in the first nine months. Average revenue per teu grew 7.2 per cent between July and September.

The shipping and logistics company gave no profit estimate although it is likely to remain in the black.

Cheng said it was a "positive surprise" that revenue on Asia-Europe services surged 25.3 per cent to US$340.97 million in the third quarter from a year earlier. Turnover was buoyed by a 4.7 per cent rise in container volumes.

But as OOIL's share price slipped 0.7 per cent yesterday, he said investors could have been disappointed revenues did not rise any higher. Cheng was "originally looking at a 13 per cent increase in revenues" overall.

Ken Cambie, OOIL's chief financial officer, said: "Given the rather ordinary trading conditions faced … a lift in our top-line operating numbers was possibly better than some were expecting."

But Windham said OOCL's average third-quarter freight rates on the Asia-Europe trade fell 3.7 per cent quarter on quarter. "[This] suggests the industry has reached the point of peak profitability in [the] third quarter and is transitioning into a downtrend for the balance of 2012."