China COSCO Q3 net loss narrows, shares up

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Oct 2009

China COSCO Holdings, the country's largest shipping group, narrowed its quarterly losses as China demand drove a rise in bulk cargo volume and freight rates and the container shipping market improved. China COSCO made a net loss of 690.7 million yuan ($101.2 million) in the quarter ended Sept. 30, cutting its quarterly deficit by nearly half from 1.27 billion yuan in the second quarter, based on Chinese accounting standards.
Its shares opened up 3 percent on Friday after the results, beating a 2.1 percent gain on the benchmark index.
The worst of the global shipping slump is over but shipper's earnings outlook remains uncertain, say analysts -- severe oversupply remains and G3 consumption is recovering slowly.
The carrier, which operates container ships and commands the world's biggest bulk cargo fleet, earned 5.56 billion yuan in the same quarter last year.
China COSCO's turnover fell 52 percent to 15.8 billion yuan in the third quarter, it said in a statement late on Thursday.
Domestic rivals China Shipping Container Lines (CSCL) and China Shipping Development disappointed the market earlier this week with quarterly results that showed no signs of market recovery, analysts said.
"China COSCO posted third quarter losses marginally worse than our expectations, mainly due to the severity of the container shipping losses worse than our expectations, largely offset by China COSCO's other operations performing better than our expectations," Sophie Loh, an analyst at Morgan Stanley said in a research report on Friday.
CSCL, which vies with China COSCO for the world's No. 6 container shipping firm position, lost 1.94 billion yuan ($284.1 million) in the third quarter. China Shipping Development, a bulk cargo carrier that ships raw materials such as iron ore and coal, saw its quarterly net profit dive 81 percent from a year ago.
A significant pullback on shipping volume since the second half of 2008 also hit China COSCO's port operating and container leasing unit, COSCO Pacific. The unit's third quarter net profit fell by nearly half to $40 million.
China COSCO shares have rebounded 85 percent this year, beating a 51 percent gain on the Hang Seng Index, on hopes that the company will benefit from a recovering global economy.

Source: Reuters