With the start of new mega alliances and a bid for the company by Chinese conglomerate COSCO Shipping, Chairman C.C. Tung said a combined group would have the best chance at survival.
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OOIL, parent of container carrier OOCL, posted a $54 million profit in first half 2017.
Orient Overseas International Ltd. (OOIL), parent of Hong Kong-based container carrier OOCL, turned a $54 million profit in the first half of 2017 compared with a $57 million loss in the same 2016 period, according to a financial update released by the company on Monday.
The company saw revenues rise 15.2 percent year-over-year to $2.6 billion for the first half, largely driven by increased revenues from the transpacific and Asia-Europe trades. Earnings per ordinary share (EPS) stood at $0.086 compared with an EPS loss of $0.091 per share in the prior-year period.
Compared to the first half of 2016, OOCL liner liftings increased by 7 percent while revenue levels per TEU increased by 8 percent, said the company.
OOCL Logistics revenue and contribution for the first half of 2017 increased by 5 percent and 6 percent respectively, compared with the same period last year. Due to improving global market conditions, the contribution from International Supply Chain Management Service increased by 13 percent and the contribution from Import/Export Services increased by 1 percent, the company said.
“Competition in the transportation sector in China remains very challenging, but we were able to counter the contribution drop in transportation with great business improvement in the long-term leased warehouses sector in China, resulting in only a 3 percent contribution drop of overall Domestic Logistics business,” said OOIL.
During the first half of 2017, the group took delivery of the first in a series of six 21,413-TEU newbuild containerships from Samsung Heavy Industries in South Korea, the OOCL Hong Kong. Delivery of the remaining five newbuild vessels is expected to be completed by the end of the first quarter of 2018. No new orders for were placed in the first half of 2017, OOIL said.
Early last month, Chinese state-run conglomerate COSCO Shipping Holdings and Shanghai International Port (Group) Co., Ltd. made a joint offer for OOIL, valued at roughly $6.3 million.
“For years, we have achieved scale benefits by means of alliance membership and the deployment of the right, often the largest, vessels in each trade lane,” OOIL Chairman C.C. Tung said of the purchase offer. “These techniques, alongside our highly skilled employees, our customer base, our IT system, our focus on cost efficiency and our robust balance sheet, go together to drive the success of our group.
“However, as the industry consolidates at speed, with the largest players now having millions of TEU in carrying capacity, the capital base necessary to operate successfully, and to establish a place among the leading industry participants, is becoming increasingly sizeable”, added Tung. “My view is that the Offer provides an opportunity for OOIL to continue to operate the OOCL brand, but as part of the China COSCO Shipping Group, and to bring together our operating model and our corporate culture with the competitive advantages of COSCO, including its size and scale, capital base, growing fleet and extensive port investments, to name but a few. This would create a combined group that would have a very strong chance of maintaining and building a status as one of the very best performers in an industry now entering a new phase.”
For more in depth coverage on the potential deal, check out American Shipper’s August feature story, “Wedding bells”.