OOIL profit soars on sale of assets

ORIENT Overseas (International) Ltd (OOIL) yesterday reported a net profit of $1.07 billion for last year, up substantially from the $13.3 million recorded for 1992.

The figure was boosted by exceptional profits of $936.8 million from the sale of the remaining 7.5 per cent stake in Hong Kong International Terminals, and by the $13.3 million earned from the sale of vessels.

After minority interest, attributable profit totalled $1.06 billiion.

The bottom line was helped by a $78 million provision made against the decline in the market value of its investment property, Wall Street Plaza in New York.

The company, which has returned to financial health after nearly a decade of restructuring, is paying its first dividend - 10 cents - on ordinary shares since 1985.

Turnover increased to $10.24 billion, from $10.03 billion in 1992.


Earnings per share last year amounted to $2.16 compared with losses of 12 cents per share in 1992.

At the end of last year, the group's debt to equity ratio had dropped to 0.1, the best in the shipping industry, from 0.8 per cent in 1992.

It held cash balances and portfolio investments of $3.73 billion, compared with $2.03 billion in 1992.

''The group is now financially strong and has built the foundations for a profitable future,'' chairman C H Tung said in releasing the results.


Mr Tung said consolidated shareholders' funds leapt by $1.02 billion last year, to $4.20 billion.

The group's core container transport business showed some improvement last year despite the continuing excess capacity in certain liner trades and the prolonged recession in Japan and parts of Europe.


On the transPacific service a small increase in revenue and the benefits of lower operating costs arising from economies of scale, resulted in an increased profit contribution.

The Far East-Europe service, as expected, suffered from a decline in average freight rates because of the introduction of additional trade capacity by competitors.

However, the volume of containers carried was above expectations because of the booming Far East markets, with the exception of Japan.


Substantial returns were achieved in the group's investment portfolio thanks to increased bond values and buoyant equity markets, particularly in Hong Kong and Southeast Asia.

However, Mr Tung doubted there would be a repeat performance in the investment portfolio this year.

Terminal activities continued to provide satisfactory returns and cash flow for the group last year.


''A further improvement in the result of the container transport business is expected in 1994 as a result of higher load factors and revenues on the transPacific service, the realisation of the new service arrangements on both the transPacific and the transAtlantic services and tight cost control,'' said Mr Tung.

The group this month placed orders for six vessels of 4,950-TEUs (20-foot equivalent units) from Japanese and South Korean shipyards at a cost of $3.78 billion.

The biggest container ships ordered so far in the world, they will be delivered in the second half of next year and the first quarter of 1996, and deployed on the transPacific service.

Mr Tung said 80 per cent of the construction cost would be financed with external borrowings and the remainder from the group's cash resources.

Mr Tung said recognising the management's experience in and knowledge of China, the group had commenced long-term strategic investments on the mainland.

Initial investments had been made in a company formed to develop a major commercial and retail property project in the Wangfujing area of Beijing.

The project was expected to have a site area of about 65,000 square metres.

OOIL will hold an interest of 27 per cent in the development company, in which several other big-name Hong Kong companies will also be involved.

Mr Tung said more details would be announced when design, development and financing plans had been finalised.