Mixed fortunes ahead, says Cosco International
Cosco International, the marine fuels, paints and ship-trading offshoot of China's largest shipping company, is facing mixed fortunes this year as shipping markets get tougher and it targets opportunities and acquisitions, executives said yesterday.
The company's chairman, Ye Weilong, said there would be limited recovery in freight and ship charter rates this year, while the supply of new ships being delivered would outpace the growth in cargo demand. Consequently, shipping companies will adopt more stringent cost control measures, which could see ship repairs and maintenance cut.
Ye said this would bring challenges to shipping services businesses. He said the company was exploring more development opportunities. Cosco Europe and Yuantong Marine Service signed a memorandum of understanding to acquire German marine equipment company Hanyuan Technical Service Centre.
Managing director Xu Zhengjun said the company was still continuing to discuss merger and acquisition opportunities in the marine fuels sector, but there was no specific timetable for acquisitions. The opportunities include the 50 per cent stake held by Cosco's parent company, China Ocean Shipping (Group), in marine fuels company China Marine Bunker (PetroChina).
Xu said the global economy was unlikely to recover significantly this year and while the outlook for the shipping sector was "still very gloomy", he thought this year would be slightly better for the shipping industry.
Ye said there was speculation that the central government could adopt shipping-friendly policies later this year. He said the company was not sure whether such policies would be introduced, but it would "love to see" such measures.
Among the possibilities thought to be under consideration were tax breaks for mainland shipping companies and shipyards and minimum freight rates for domestic cargoes.
Cosco International saw net profit drop 7 per cent to HK$363 million last year from HK$390 million. Turnover fell 6 per cent to HK$10 billion from HK$10.66 billion a year earlier.
Marine fuel was the biggest revenue earner, contributing HK$6.28 billion of the total, while marine and container coatings were the main profit drivers, generating HK$137.86 million in net profit.