Home » Breaking News, Ports/Terminals » Cosco Pacific profit drops as box leasing weakens

Cosco portHong Kong-headquartered Cosco Pacific reported an 11.4 percent increase in revenue in the first half of 2014 to US$440.158 million against revenue of $395.195 million in the corresponding period in 2013.

Revenue from its terminal business rose by 18.9 percent to $258.082 million, while revenue from container leasing, management, and sale businesses rose 2.1 percent to $184.107 million.

Gross profit in the same period fell by 2.9 percent, however, to $167.970 million year-over-year from $172.978 million, as strong profit from the terminal business was offset by low rental yield from the container leasing business.

Its terminal business saw profit increase by 17.5 percent to $109.085 million against $92.83 million in the same period last year, primarily driven by the robust growth in container throughput.

In contrast, profit from the container leasing, management, and sale businesses fell by 30.2 percent to $53.289 million. The weak demand for container leasing services coupled with the fall in profit margin from the disposal of returned containers dragged down earnings, according to the company.

During the period, Qingdao Qianwan Terminal reported an increase in container volume and revenue, bringing in a profit contribution of $21.616 million, up 50.5 percent year-over-year.

Benefiting from the strong growth in container throughput, the profits of the Piraeus Terminal and Shanghai Pudong Terminal increased by 21.9 percent to $15.073 million and 30.6 percent to $10.946 million, respectively, over the same period last year.

In addition, the group completed the acquisition of a 39.04 percent equity interest in Taicang Terminal in July 2013, generating a profit of $1.978 million for the period. Ningbo Yuan Dong Terminal’s profit contribution increased 45 percent to $5.431 million.

Antwerp Gateway NV in Belgium achieved a turnaround and recorded a profit contribution of $1.191 million, while the loss from Xiamen Ocean Gate Terminal narrowed as a result of robust throughput growth and an increase in tariff. Together with Xiamen Tongda Terminal which was acquired in March 2013, the terminal posted a loss of $2.868 million, representing a 34.6 percent decrease.

During the period, all terminal subsidiaries recorded revenue growth. Revenue from the terminal business increased by18.9 percent to $258.082 million from the same period in 2013.

In the first half of 2014, Cosco Pacific reported strong growth in total container throughput. Equity throughput climbed 13.2 percent to 9,285,396 TEUs (twenty-foot-equivalent units), while total throughput recorded a 10.1 percent rise to 32,481,568 TEUs from 29,494,353 TEUs last year.

Meanwhile, though the first half of 2014 saw an increase in demand for new containers, the container lease rates did not benefit from it.

The group’s container leasing, management and sale businesses generated total revenues of $184.107 million from $180,234,000 in the first half of 2013, representing a rise of 2.1 percent. The business revenue growth was largely attributed to an increase in revenue from the disposal of returned containers.

For the second half of 2014, the group forecasts that it will continue to benefit from the economic recovery in the U.S. and Europe, which will in turn boost global trade and industrial production.

Its container throughput is expected to grow steadily, giving a boost to terminal business profits. As for container leasing, it expects demand to increase during the second half of 2014, “but the operating environment will remain highly competitive and the rental yield is likely to remain low.”

Photo: redyamflan

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