Shares in Sinotrans Shipping dropped more than 3 per cent yesterday after the firm said net profit slumped 78.1 per cent to US$20.1 million last year, down from US$91.7 million in 2011. The stock fell 3.1 per cent to close at HK$2.16 as prospects for the dry bulk cargo sector, which contributed 89.8 per cent of total revenues of US$222.2 million last year, remain gloomy in 2013. Xie Shaohua, chief financial controller, said "a large amount of fresh tonnage will pour into the [dry bulk] market" this year. He estimated there would be a 7.4 per cent increase in the dry bulk fleet this year based on figures from Clarkson, the British ship broking house. Although this would ease from the 10.3 per cent tonnage rise last year, Xie said there would be just moderate growth of 5 per cent in dry bulk seaborne trade volumes in 2013. He said: "China was vulnerable to slower economic growth" that could affect the market. Sinotrans Shipping operates 42 dry cargo and nine container ships. Executive director Li Hua said the container market's prospects were linked to economic recovery in the US and Europe. Barclays analysts Esme Pau and Jon Windham said the net profit figure indicated Sinotrans Shipping barely broke even in the second half, making all the profits in the first half. They said: "Despite some early signs of improvement in current spot rates, Sinotrans' [exposure to] long-term contracts renders it less capable of benefiting from spot rate increases." Sinotrans Shipping posted a US$7.5 million operating loss last year which included an impairment provision of US$7.04 million, mainly on four elderly container ships. But this was offset by an increase in investment income which boosted total cash to US$916.8 million in 2012, against US$892.1 million in 2011. The Barclays analysts said the firm's cash pile "would make it an apt candidate to make vessel purchases at current low new-building prices should the company opt to do so". Li reiterated plans for Sinotrans to expand its fleet, although after taking delivery of two new dry bulk Panamax ships last year no other ships are on order. Li said there had been "in-depth studies and negotiations" about possible new orders of fuel-efficient ships. "We have had close negotiations with shipbuilders," he said. Li hoped the mainland government and shipping industry could "formulate policies that would be beneficial for healthy development" of the shipping sector, including possible rebates for shipbuilders and tax breaks.