“One of best years to date” leads to profit bonanza at OOCL parent
“One of best years to date” leads to profit bonanza at OOCL parent
Hong Kong-based Orient Overseas (International) Ltd., the parent company of OOCL, increased its net profit 536 percent last year to $329 million from $51.7 million in 2002, as it reported that 2003 was one of the best years to date for the container liner industry.
The 2003 net income is more than twice the level of profit recorded by Orient Overseas (International) Ltd. (OOIL) in any of the last 10 years.
'2003 has turned out to have been one of if not the best year to date for the container liner industry,” said C.C. Tung, chairman and chief executive officer of OOIL. “To the surprise of most, and from very uncertain beginnings, the market gathered strength at an unprecedented pace during the course of the year.”
Group operating income soared 91 percent in 2003 to $359 million from $295 million in 2002.
Group revenue, including revenue from logistics, terminals and property, rose 32 percent last year to $3.2 billion from $2.5 billion.
'Our international transportation, logistics and terminals division enjoyed an unprecedented trading environment during 2003 as we experienced a much better supply-and-demand balance despite the substantial growth in capacity,” Tung said. After experiencing “significant increases” in both container liftings and average freight revenues during the first half of 2003, OOIL saw volumes grow and rates increases accelerate during the second half of the year.
The revenue of OOCL, the main operating arm of the group, rose 37 percent last year to $2.8 billion from $2 billion in 2002. Carryings increased 19 percent to about 2.7 million TEUs, whereas average revenue per TEU moved rose 15 percent to about $1,000.
“All trade routes achieved an appreciable improvement in performance during the course of 2003 as volumes rose significantly and freight rates for most routes continued their strong recovery,” OOIL said.
OOIL’s Global Terminal in New York moved into profit last year. The Hong Kong-based company said 2003 was the first time that all four of its container terminals were profitable. The terminals, located in New York-New Jersey and Vancouver, increased their overall throughput 7 percent last year.
OOIL will pay a final dividend of 12.8 cents per share, an increase from the final dividend of 2.5 cents last year.
The group announced a plan to issue shares on the basis of one bonus share for every 10 existing issued ordinary shares. It also wants to reduce the “board lot size” for trading in OOIL shares from 2,000 to 1,000.
Tung said the outlook for the international transportation and logistics businesses remains positive, although OOIL did not disclose its profit forecast for this year.
“During the course of 2003 the supply and demand balance moved firmly in our favor and at the present time it is hard to find any data to suggest that this favorable situation will alter in the near term,” he said.
In 2003, the group ordered four 8,063-TEU containerships for delivery in 2006 and 2007. It has also signed long-term charters for eight 5,888-TEU new vessels due to be delivered between late 2005 and the first half of 2007.