China International Marine Containers, the largest manufacturer of shipping containers worldwide, issued a profit warning to investors predicting a loss of 450 million yuan renminbi (U.S. $67.4 million) for the first six months of the year.
China International Marine Containers (CIMC), the largest manufacturer of shipping containers worldwide, is projecting a loss of 450 million yuan renminbi (U.S. $67.4 million) for the first half of 2016, according to a profit warning issued to investors earlier this week.
The Hong Kong-listed company posted a profit of RMB 1.52 billion in the first six months of 2015.
CIMC primarily attributed the expected loss to the slowdown in global trade, which has diminished demand for new containers, and increased currency exchange volatility.
“During the first half of 2016, there was a slowdown of China’s economic growth, continuous weak demand from external economies, continuous downturn of international trade and export and increased fluctuation in RMB,” the company said. “Although the group has implemented various measures for active response, the operating results during the reporting period are expected to still record a substantial decline.”
The second half of the year doesn’t offer much hope either, as CIMC noted around 77 percent of its earnings in 2015 were generated during the first six months of the year.
The group also confirmed it has abandoned its pursuit of Sinopacific Shipbuilding’s offshore construction unit due to a disagreement over asset valuation.
CIMC Vehicles, the company’s semi-trailer manufacturing arm, however, acquired UK manufacturer Retlan for 92 million British pounds (U.S. $120.69 million) in an attempt to continue diversifying its business. Northern Ireland-based Retlan posted earnings of 14 million pounds on 198 million pounds in revenues in its last financial year.
CIMC said the acquisition would “triangulate” its European semi-trailer production with plants in Poland and Belgium after it scrapped plans to set up a manufacturing facility in southern Germany, adding the deal was unaffected by the recent Brexit vote.
“CIMC’s resolution to seek business growth and expansion in Europe will not be shattered by Brexit, but it may make necessary strategic adjustments and adapt to local customers’ demands with more accurate market strategies,” the company said. “Previously, a standalone company may serve a larger area in Europe featuring regional market integration, but in the future, the European markets may become more differentiated.”
“Even if the British pound depreciates by 10 percent, it is in our hands,” added CIMC Vehicles General Manager Li Guiping. “To some extent, the depreciation will benefit export sales of the UK-based company to other European countries, North Africa, and the Middle East.”
CIMC projects $67m loss in first half of 2016
