Euro debt crisis takes toll on China Cosco results
Losses grow by more than 76 per cent as overcapacity and slow recovery hit bottom line
China Cosco, the listed arm of the mainland's biggest shipping company, reported a first-half net loss of 4.87 billion yuan (HK$5.95 billion) late last night, 76.7 per cent higher than in the same period a year earlier.
It came as no surprise, since the company warned a month ago that its net loss would widen to more than 4.14 billion yuan. During the first six months, revenue reached 42.56 billion yuan, up 1.3 per cent from 42 billion yuan a year earlier. China Cosco, which controls the dry bulk, container shipping and terminals operations of China Ocean Shipping, had already reported a net loss of 2.69 billion yuan for the first quarter.
The company said its container shipping business, which contributed 23.1 billion yuan in revenue in the first half, was hindered by the slow recovery of the global economy and the spread of the European debt crisis. "The global demand for container shipping was moderate in the first half of 2012," it said in a filing with the Hong Kong stock exchange.
Cosco said excessive shipping capacity was also putting pressure on the market.
"The capacity of major routes has increased significantly due to the delivery of new vessels, reduction in idle capacity and the replacement of small vessels by bigger ones," it said.
The company's operating fleet comprised 166 container vessels by the end of June, representing an increase of 16.8 per cent year on year in terms of total shipping capacity.