China COSCO loses 7.2 billion yuan in first half on weak container demand
China COSCO, the world’s fourth largest container shipping company, posted a net loss of 7.2 billion yuan in the first six months of this year, due to weak global demand and declining freight rates.
The net loss compared with a profit of 1.97 billion yuan in the same period last year, the company said in a filing to the Hong Kong Exchanges & Clearing on Friday morning.
Shares dropped 0.4 per cent to HK$2.67 in Hong Kong on Friday morning. Its Shanghai-traded stock also lost 0.4 per cent to 5.19 yuan.
Revenues from continuing operations fell 3 per cent year-on-year to 29.6 billion yuan. Basic loss per share is 70.56 cents, compared with basic earnings of 19.32 cents per share in the first half of last year.
In 2015, the Chinese government merged China Shipping Group and China Ocean Shipping Group to create China COSCO Shipping Corp, the parent company of China COSCO Holdings.
China COSCO said in a statement that global container shipping market has been sluggish since the second half of 2015, with freight rates at record lows.
In the first half of 2016, the averages of the Shanghai Containerized Freight Index (SCFI) and the China Containerized Freight Index (CCFI) were 533.8 points and 690.9 points,respectively, representing a decrease of 35.8 per cent and 28.8 per cent year-on-year.
The freight rates for main routes between Europe and America and the routes between Asia and Europe were significantly lower than the levels during the 2008 financial crisis, the company said.
Looking forward, China COSCO said market conditions will remain challenging and the container shipping industry may continue to be plagued by the over-capacity problem. Other risks include the uncertainty about US interest rates and potential geopolitical tensions.
Nevertheless, the company expected global container market demand to pick up in the third quarter, the traditional peak shipping season.