LISTED ARM OF CHINA SHIPPING REPORTS MIXED FINANCIAL RESULTS
China Shipping Development Co. Ltd., the Hong Kong-listed subsidiary of China Shipping Group, has posted increases in profits for 2001, as better results from the group’s domestic bulk shipping activities more than compensated for a loss at China Shipping Container Lines.
China Shipping Development increased its net profit by 15 percent last year, to Renmibi325 million ($39 million), from Renmibi282 million in 2000. Profit from operations soared by 68 percent, to Renmibi898 million ($108 million), from Renmibi536 million. Gross profit last year was Renmibi980 million ($118 million), up from Renmibi619 million. Revenue increased by 22 percent, to Renmibi3.9 billion ($470 million), from Renmibi3.2 billion in 2000.
Results from the China Shipping Development company give a window into the results of the China Shipping Group and its activities. China Shipping Group, the second largest shipping group in China, does not publish its group financial results.
China Shipping Development reported that its domestic shipping activities accounted for Renmibi2.7 billion ($331 million), or 70 percent of its revenue, and Renmibi754 million ($91 million), or 76 percent, of its gross profit. Most of the Hong Kong-listed company’s revenue comes from domestic coal and oil transportation in China. Gross profit from both coal and oil transportation activities increased last year.
By contrast, China Shipping Development said that China Shipping Container Lines Co. Ltd., an associate of the company, “faced tremendous challenges” in 2001.
“In 2001, the global shipping capacity of container vessels increased by 12.3 percent., and the average freight rate dropped by over 20 per cent, as compared with 2000,” it said.
The main reasons for the operating loss of China Shipping Container Lines in 2001 were that the growth of the world trade slowed down and more shipping capacity was delivered into service, China Shipping Development said. “The excessive shipping capacity of container vessels caused the freight rate in the global container transportation (to drop) to its lowest level,” it commented.
In 2001, China Shipping Container Lines carried about 1.7 million TEUs, 21 percent more than in 2000. However, its revenue rose by only 11 percent, to Renmibi7.78 billion ($940 million).
The profit results of China Shipping Container Lines were not published by China Shipping Development.
Faced with difficult market situation, China Shipping Container Lines adopted a series of measures “to decrease the operating risk,” such as a reduction in the number of vessels deployed in the Asia/Europe and transpacific trades and the merger of its Asia/north Europe and Asia/Mediterranean services.
Commenting on China Shipping Container Lines, China Shipping Development said that the growth of the domestic economy promoted the development of the domestic container transportation. “In view of such development, China Shipping Container Lines deployed more vessels, especially large vessels, to the domestic shipping services,” it said. The container shipping arm made operating profits of Renmibi130 million ($16 million) on its domestic services last year.
As large international containers shipping lines have started to cut excess capacity, are cooperating more with other carriers, and see an economic recovery, China Shipping Development predicted that the level of container freight rates will rise gradually in 2002.