SHANGHAI (Dow Jones)–China Cosco Holdings Ltd. (1919.HK) said Thursday that its net loss widened in the first quarter as its dry-bulk shipping business slumped amid a slowdown in the global shipping industry.
The Beijing-based shipping company said its net loss for the three months ended March 31 totaled CNY2.7 billion ($428.2 million), according to Chinese accounting standards, compared with a net loss of CNY501.77 million a year earlier.
Revenue fell 4.6% on the year to CNY15.69 billion from CNY16.45 billion.
The results lend weight to a gloomy outlook for the year made in March by China Cosco Chairman Wei Jiafu, who said oversupply and a funding squeeze would continue to dog the global shipping industry. Wei said at the time that he expected lower rates and the financing squeeze to force weaker players to default on their payments or go into bankruptcy.
Pressure has been particularly high on China Cosco’s dry-bulk unit, which carries commodities including coal, grain and iron ore. The unit posted a decrease of 14.6% on the year in shipping volume in the first quarter to 55.6 million metric tons.
In 2011, China Cosco, which has 147 dry-bulk ships under charter and owns 229, stopped paying fees on some ships it leased before 2009 from Chinese and Greek ship owners, triggering the seizure of three ships. The company later said it had resumed its payments.
The company has said it expects excess shipping capacity to continue to weigh on the dry-bulk unit as it forecasts dry-bulk capacity growth of 10.8% in 2012, higher than an anticipated 4% growth in demand. In its statement Thursday, China Cosco said as of March 31 it had orders of 20 dry-bulk cargo vessels totaling 1.9 million deadweight tons.
Cosco’s container unit, in contrast, showed a recovery in the first quarter, as shipping volumes rose 19.5%, pushing the unit’s revenue up 2% to CNY8.05 billion.
China Cosco, the listed flagship of state-owned China Ocean Shipping (Group) Co., has businesses ranging from dry-bulk shipping, container shipping, port operations and container construction to cargo and shipping agency operations.
-By Andrew Galbraith, Dow Jones Newswires