Cosco Pacific, the world's fifth-largest container operator, says overseas port projects will be the major driving force for earnings in the medium term.
Unveiling a 24.8 per cent rise in net profit to US$237 million for the first half yesterday, Cosco said its search for overseas acquisitions was gathering pace.
After stripping out disposal gains from ports in Dalian and Qingdao and other non-recurring items, underlying profit surged 116 per cent to US$212.6 million from a year earlier on a 144 per cent rise in profit from terminal business.
Helped by higher turnarounds in the Piraeus terminal in Greece and an increased stake in Yantian International Container, profit from terminal business, which accounted for 53.6 per cent of total revenue, increased to US$96.7 million in the first six months from a year earlier.
'The rebound in Piraeus has given us much confidence in further overseas acquisitions,' said Ken Chan, deputy managing director of the company.
The previously troubled port in Greece was plagued by strikes after the company bought it from the local government in October 2009. A drop in shipments followed due to the service disruptions as well as the country's sovereign debt crisis.
But the largest port in Greece swung back into black in the last quarter of 2010 after the company exerted stringent cost control measures and improved service at the port. In the first half, Piraeus contributed US$1.7 million in profit, as opposed to a US$ 10.7 million loss in the same period last year, on a 28 per cent jump in volume.
The port moved 480,000 million 20-foot equivalent units (TEUs) in the first half. Chan said it could handle about 1.6 million TEUS for the year, on par with a record achieved by the port when it was run by the government.
'Overseas acquisitions are gathering pace. We are looking at some projects in Europe now,' Chan said. Cosco is also still pursuing the acquisition of a stake in the Kaohsiung Terminal through a partnership with Yang Ming Marine Transport in Taiwan
The contribution from overseas ports would increase over time, Chan said. In the first half, cargo handling at overseas ports, which accounted for 13 per cent of total throughput, grew 17 per cent year on year.
In the first six months, total throughput at the ports operated or partially owned by the company grew 19.7 per cent annually to 24.2 million TEUs. Equity throughput, which is determined according to interest in each port, increased 31 per cent to 6.5 million TEUs.
In addition to an average 10 per cent year-on-year rise in handling charges at mainland ports, the revenue in the company's port division rose 45 per cent to US$149 million.
The port operator's container leasing division, which accounts for 46 per cent of total sales, saw profit increase 17 per cent to US$56 million on an 8 per cent growth in sales - slower growth than its rivals.
Shares in the company dropped 0.96 per cent to HK$10.28 yesterday.
The amount, in yuan, investment in mainland ports could fall between 2011 to 2015, based on weak demand from the US and Europe