OOIL turns around to a US$181m profit

Shipping giant remains cautious on outlook after swinging back from a loss to surprise the market with a first-half gain of US$181.3 million

PUBLISHED : Tuesday, 12 August, 2014, 12:56am
UPDATED : Tuesday, 12 August, 2014, 6:21pm

Orient Overseas (International) Ltd (OOIL) returned to the black in the first half of the year on the back of a pickup in the container shipping industry and stringent cost controls.

The holding company of Orient Overseas Container Line, one of the world's largest container shipping lines, said profit attributable to shareholders in the first months to June was US$181.3 million, against a loss of US$15.3 million in the same period last year.

Sales rose 7 per cent to US$3.2 billion. Revenue at subsidiary OOCL rose 4 per cent.

The outlook for the container shipping industry, in the doldrums for some time, is on course for a mild recovery. OOCL said it expected demand for ships to grow 5.2 per cent this year and supply rise 5.6 per cent.

"The company's results are above our expectations," said Rahul Kapoor, the equity research director at maritime consultancy Drewry. "The current peak season is turning out to be a robust one, so I expect the second half to be even better.

"We are medium-term positive on the outlook of the container shipping industry and OOCL, which we see as the best play in Asia shipping on the back of recovery in container shipping markets."

Still, OOCL, which industry consultant Alphaliner ranks as 11th largest in the world by fleet size, is treading with caution and urging competitors not to cut prices.

"All carriers should take stock and look for better ways to improve their cost structures and service quality. It is only through product quality that carriers can achieve differentiation in pricing," it said.

Company spokesman Stanley Shen said OOCL was looking to order new mega vessels, but declined to elaborate. The company has four 8,888 teu vessels on order after taking delivery of two 13,000 teu vessels in the first half.

The industry expects the G6 alliance, in which OOCL is a member, to order container ships capable of carrying 18,000 teu or more as part of the growing trend for larger vessels.

OOIL's income from property holdings also improved sharply. Hui Xian property trust contributed US$41.4 million to profit, compared with US$9.1 million a year earlier.

OOIL proposed an interim dividend of 7.5 US cents per share. There was no payout for the same period last year.

Last month, a French court found OOCL guilty of involuntary manslaughter in the death of Courtenay Allan, a 37-year veteran of the company who fell into a lift shaft aboard OOCL Montreal in the French port city of Le Havre 11 years ago.

Shares of OOIL yesterday closed 4.65 per cent higher at HK$42.80 in a market that rose 1.29 per cent.