Growth in demand fails to offset rising fuel costs
Shares of Orient Overseas (International) Ltd, a shipping company controlled by the family of former Hong Kong chief executive Tung Chee-hwa, fell 11.17 per cent to close at HK$34.20 yesterday after announcing a 93 per cent decline in its first-half net income.
Profit decreased to US$158.3 million for the six months to June from US$2.22 billion a year earlier due to an exceptional gain of US$1.98 billion from the sale of its North American ports during the first half of last year.
Operating profit fell 27 per cent to US$217.6 million from US$298.4 million as rising demand from Asia failed to offset higher fuel costs.
Sales rose 27.4 per cent to US$3.2 billion from US$2.51 billion, boosted by strong demand for its Asia to Europe, intra-Asia and Australasian operations. Gross profit margin fell to 13.4 per cent from 16 per cent.
The average bunker fuel price in the first half rose 64 per cent to US$502 per tonne. Bunker fuel now represents 79 per cent of voyage costs versus 70 per cent a year ago.
'While China exports remain robust, there are signs of slower growth for imports,' said Ken Cambie, OOIL director and chief financial officer. 'This may reflect the slowdown in exports from China to the United States and Europe, causing a reduction of raw material and semi-finished goods movement.'