COSCO Reports Strong Profit Growth
COSCO International Holdings Limited has disclosed the unaudited consolidated results of the company and its subsidiaries (COSCO) for the six months ended June 30, 2014.
COSCO’s gross profit increased by 29% YOY, while the overall gross profit margin added 1.5 percentage points to 8.9%.
In the first half of 2014, volume of both scrapped vessels and newbuild contracts recorded significant increase as compared with the same period last year, as a result of Chinese shipowners’ accelerated fleet restructuring activity.
Revenue from COSCO’s shipping services grew by 12% YOY. Profit before income tax from shipping services increased by 47% YOY.
With the sharp increase of commission income from newbuilds, second-hand vessels and others, revenue from ship trading agency service segment jumped by 103% YOY, and segment profit before income tax surged by 133% as compared with the same period in 2013.
The newbuild contracts on hand, which were ordered through COSCO Ship Trading and are yet to be delivered, amounted to 64 vessels or 7,089,000 dead weight tonnages. These new vessels were expected to be delivered in the coming two to three years.
Orders for marine spare parts increased as shipowners and shipping companies loosened the cost control measures given by the recovering market.
Increase in newbuild contracts also drove the orders for marine equipment and spare parts. During the period, revenue from marine equipment and spare parts segment increased by 35% YOY.
Segment profit before income tax increased by 70% YOY, including the contribution from Hanyuan in Germany which was acquired at the end of June 2013.
Due to keen market competition, sales volume of container coatings during the period declined by 12% YOY.
As for marine coatings, the newbuild delivery by Chinese shipyards dropped as compared with the same period last year, which caused the Jotun COSCO’s sales volume of marine coatings for new ships down by 11% YOY; meanwhile, sales volume of marine coatings for ship maintenance and repair climbed by 20% YOY.
Jotun COSCO had marine coatings contracts in hand for 328 newbuild vessels or 26,450,000 dead weight tonnages. The coatings were scheduled to be delivered in the coming two to three years.
Revenue from coatings segment slightly decreased by 3% YOY.
Total sales volume of marine fuel products was 635,365 tonnes, up by 13% as compared with 562,323 tonnes in the same period in 2013. Revenue from marine fuel and related products segment was up by 11%.
Profit before income tax from marine fuel and related products segment decreased by 14% as compared with the same period in 2013.
Looking ahead to the second half, global economy will still be subject to many uncertainties for recovery, and shipping market is expected to rebound at weak momentum.
According to COSCO, shipping services companies will be facing pressures in the future operation.
“Meanwhile, Chinese shipowners will continue to scrap old vessels and order new ones, making the transaction of both newbuilds and second-hand vessels remain active in the second half, which will continue to push up demand for shipping services closely related to newbuild vessels,” COSCO explained.