The port terminal operating arm of Chinese state-run conglomerate COSCO Shipping reported a net profit of $512.45 million for the full year in 2017, a 183.2 percent increase from the prior year.
COSCO Shipping Ports nearly tripled its earnings in 2017 thanks to increased handling volumes and a one-time benefit from the sale of certain terminal assets, according to the company’s most recent financial results.
The port terminal operating arm of Chinese state-run conglomerate COSCO Shipping, formerly known as COSCO Pacific, reported a net profit of $512.5 million for the full year in 2017, a 183.2 percent increase from the prior year.
The company posted basic earnings per share (EPS) of $0.17 compared with $0.08 per share in 2016 as revenues rose 14.1 percent to $634.7 million.
The surge in profits included $285.4 million from the May 2017 divestment of the company’s shares in Qingdao Qianwan Container Terminal Co., a deal that also saw COSCO Ports pick up a 20 percent stake in Qingdao Port International Co. (QPI).
Adjusted to exclude the one-off effects of those items and profits relating to businesses that were discontinued in 2016, COSCO Ports’ profits climbed 25 percent year-over-year to $227.1 million.
Cargo throughput at the firm’s port terminals totaled more than 100 million TEUs in 2017, a 5.4 percent increase from the previous year, as gains were realized at nearly every facility across the company’s portfolio. Excluding volumes handled at QPI in 2017 and Qingdao Qianwan Terminal in 2016, total throughput grew 13.4 percent to nearly 88 million TEUs.
Total bulk cargo volumes were essentially unchanged from the previous year at 80.8 million tons.
Broken down by region, container volumes at COSCO Ports terminals in China grew 5.7 percent year-over-year to nearly 16 million TEUs in the Bohai Rim area, 6.1 percent to 19.6 million TEUs at facilities in the Yangtze River Delta, 12.1 percent to 5.1 million TEUs in the Southeast China Coast, 9.5 percent to 27 million TEUs in the Pearl River Delta, and 19.2 percent to 1.4 million TEUs in the Southwest Coast region.
Overseas terminals operated by COSCO Ports, meanwhile, posted a total throughput of 18.8 million TEUs, a 38.7 percent increase from the previous year.
Excluding exceptional items, COSCO Ports’ terminal operating business reported a profit of $299.9 million during 2017, a 23.4 percent increase from last year. Of this, profits from terminal operations in which the company has a controlling stake slipped 1.7 percent to $58 million, while earnings from terminals in which COSCO Ports owns a minority share surged 31.5 percent to $241.8 million.
The company attributed the increases in volumes and profits primarily to broad-based global economic growth and the resulting increase in international trade.
“According to the International Monetary Fund (“IMF”), global economic growth was expected to reach 3.7 percent in 2017 – the fastest growth pace since 2011 – which had driven the expansion of international trade to 4.7 percent, an increase of 2.2 percentage points over the previous year,” COSCO Ports said in a statement. “Domestically, China’s economy continued to gather steam, with imports and exports fueled by rising external and internal demands. According to the statistics of the China Customs Department, the total amount of imports and exports in 2017 grew 14.2 percent, with exports and imports increasing by 10.8 percent and 18.7 percent respectively.
“Backed by the increase of international trade and the steady recovery of the global economy, there was a turnaround in the global shipping market as the increase in the demand over supply during the year helped alleviate the overcapacity in the industry,” the firm added. “According to Drewry Shipping Consultants Limited, the total throughput of global containers was expected to increase by 5.4 percent in 2017, rising 2 percentage points over 2016. Ports in China have also reported good growth as total throughput for the year was 236,800,000 TEU, an increase of 8.3 percent, up 4.7 percentage points from last year.”
COSCO Ports also noted the positive impact of the establishment of the OCEAN Alliance, a major east-west container carrier vessel sharing agreement of which parent company China COSCO Shipping Corp. is a member.
“Ever since it started operation in April 2017, the OCEAN Alliance has been increasing its calls to the terminals of COSCO SHIPPING Ports and has accounted for 44 percent of the total throughput of the group’s subsidiaries for the year,” the company said. “The group believes the calls of the OCEAN Alliance’s fleet will continue to drive the growth of the group’s throughput going forward.”
According to ocean carrier schedule and capacity database BlueWater Reporting, the OCEAN Alliance currently operates a total of 282 vessels with a combined 2.7 million TEUs of capacity on the transpacific, Asia-Europe and transatlantic trades.
COSCO Ports nearly triples earnings in 2017
