OOIL nets US$10B in 2022 on record liner profits

• Group revenue in full-year 2022 was US$19.82 billion, up  17.75% y-o-y; group EBIT was $10.09 billion, up 36.38% y-o-y

• Group EBITDA rose 37.43% to $10.95 billion and operating cashflow was $11.25 billion

• Profit attributable to equity holders increased 39.8% y-o-y to $9.97 billion

• Container transport and logistics business EBIT was $10.1 billion, up 36.72% and representing a 51% EBIT margin, despite liner liftings dropping to 7.1 million TEUs

Orient Overseas (International) Ltd. (OOIL) has announced a US$9.96 billion profit attributable to shareholders for 2022, a 39.8% increase from $7.13 billion a year earlier, on record liner profits and good performance by its logistics business that lifted full-year revenue 17.75% to US$19.82 billion.

Group EBIT (earnings before interest and tax) rose 36.38% to $10.09 billion.

OOIL said in a stock exchange disclosure that its Hong Kong-based container transport and logistics business, OOCL, posted EBIT of $10.1 billion, up 36.72% from $7.39 billion in 2021, despite box liftings falling to 7.1 million twenty-foot equivalent units (TEUs) as demand for shipping softened in the second half of 2022.

Earnings per ordinary share of $15.09 in 2022 compares with $11.08 in 2021. The board has recommended a full-year dividend of about 70% of the $6.97 billion profit attributable to shareholders, with a proposed 2022 final dividend of $2.61 per share and a second special dividend of $1.95 per share.

The group’s financial position remains one of the industry’s most robust, with net cash of $9.1 billion and cash and bank balances of $11.2 billion as of December 31, 2022.

As of December 31, 2022, OOIL had cash and bank balances of $11.21 billion versus $712.2 million of debt repayable in 2023.  Its net cash to equity ratio of 0.68 to 1 as at end-2022 was a marked improvement from 0.47 to 1 at end-2021.

OOCL, undeterred by severe congestion in its network that drove down liftings and loadable capacity, reported record revenues of $6.1 billion in the first quarter of 2022 and $5.29 billion in the second-quarter, and managed a slightly lower $5.04 billion revenue in the third quarter.

OOIL said that its 2021 annual report gave the highest-ever revenue, liftings and profit figures for its core container shipping and logistics business, which beat even the outstanding results for 2020.

“We could not have foreseen that the results for 2022 would once again break new records. The profits and cashflow [in] 2022 put us in a very strong position to fund not only our continuing programme of measured and intelligent growth, but also to fund our ongoing investment in information technology and digitalization of our industry,” OOIL said.

For much H1 2022, the container shipping market endured immense supply pressure caused by severe congestion, with long queues of ships waiting to enter the ports of Long Beach and Los Angeles and, at times, two- to three-week delays for ships entering some main ports on the US East Coast, OOIL said.

The impact of the downward pressure on effective supply far outweighed that of increased nominal supply from massive deployment of new capacity on the busiest corridors, and from smaller players entering key markets such as the Transpacific tradelanes.

Unfulfilled year-on-year demand growth expectations and supply chain congestion meant large quantities of goods were arriving late, leading to reduced container demand from importers that sent freight rates on most major tradelanes on a steady decline.

“At the time of writing, it appears that this unmistakable downwards trend of freight rates may have started to stabilize,” OOIL said. But it added that further supply increases in 2023 and 2024 with the delivery of new ships will possibly delay any improvement in the container shipping markets.

In March 2023, OOIL took delivery of the first vessel built for the group since 2018. The 24,188-TEU OOCL Spain will be followed by 28 new vessels scheduled for delivery over the next five years. Seven of the vessels still under construction will be dual-fuel methanol ships, “a clear proof of [OOIL’s] commitment to decarbonization,” the group said.

“Our substantial newbuilding programme is a clear indication of the intention of the COSCO Shipping Group, of which OOIL is an integral part, to be a leading player in the top echelon of the industry, and also of the whole group’s commitment to its very successful dual brand strategy,” OOIL said.

The group said OOCL Logistics performed very well in 2022 and its co-operation with the liner side will be a key driver in OOIL’s plans to develop more end-to-end business with customers.