China Merchants puts ports expansion on hold
Operator to concentrate on logistics and management in year of consolidation
China Merchants Holdings (International), one of the mainland's largest port operators, will spend the year digesting its recent investments rather than continuing to expand its network of port facilities, senior company officials have said.
Chairman Fu Yuning said yesterday the central government was expected to soon approve its 5.57 billion yuan purchase of a 30 per cent stake in Shanghai International Port Group - operator of the world's third-largest port.
'I expect that government approval for our investment will be announced by the end of March or early April,' Mr Fu said. 'We should get at least 75 per cent of profit contributions from our investment in the Shanghai port this year.'
Mr Fu said that as the company had completed its strategic layout of ports in Hong Kong and on the mainland, it would focus on strengthening management control and logistics services.
The purchase will give China Merchants, which operates ports mainly in Shenzhen and Hong Kong, a foothold in the Yangtze River Delta through Shanghai's Waigaoqiao and Yangshan ports.
Mr Fu spoke after the group's managing director, Li Yi, unveiled a 40 per cent jump in consolidated net profit to $2.06 billion for the 12 months to December last year.
'Throughput growth in Shanghai has been very fast and will be a major contributor to our overall growth,' Mr Fu said.
He said China Merchants handled 7.2 million teu (20-foot equivalent units) containers at its mainland terminals last year, an increase of 44 per cent, while throughput at its Hong Kong terminals - it owns a 22 per cent stake in Modern Terminals - rose 13 per cent to 5.6 million teu.
Mr Fu said he expected the company's container volume to increase at least 15 per cent this year, and to include a hefty contribution from the Shanghai ports' 14 million-teu throughput.
He added that China Merchants expected to handle 37 million containers across its network next year, rising to 45 million teu by 2008.
'In my view, container growth will be concentrated in Hong Kong and on the mainland. [But] the ports of Shenzhen, Shanghai and Ningbo will see the fastest economic growth,' Mr Fu said.
The company's turnover for the year rose 13 per cent to $2.41 billion. Mr Li said port-related businesses contributed about $950 million to its earnings, and container manufacturing $624 million. Its results were also helped by a $274 million one-off gain from the sale of its oil tankers.
China Merchants said it would pay shareholders a final dividend of 30 cents a share, up a cent on last year.
