China COSCO Reports USD $1.6 Billion Loss in 2011, Dry Bulk Market is a Major Factor
SHANGHAI (Dow Jones)–China Cosco Holdings Ltd. (1919.HK) said Friday it swung to a loss in 2011 because of a slowdown in international trade and higher fuel costs.
The Beijing-based shipping company recorded a net loss for the 12 months ended Dec. 31 of CNY10.45 billion, according to Chinese accounting standards, compared with a net profit of CNY6.77 billion a year earlier.
Revenue fell 14% to CNY68.91 billion from CNY96.44 billion.
The company didn’t recommend a final dividend. It recommended a final dividend of CNY0.09 a share the year before.
China Cosco Chairman Wei Jiafu said in the firm’s earnings report that the global shipping market remains challenging this year because of excessive shipping capacity and slowing international trade growth.
But there were some signs of improvement, he added.
He said he expects the global container shipping market to improve in 2012 and the global dry bulk market would pick up again in the second half of 2012.
China Cosco issued a profit warning in October, indicating that a full-year loss was likely, after it announced a net third-quarter loss of CNY2.07 billion, down from a profit of CNY2.11 billion a year earlier.
In the warning, China Cosco highlighted the difficulties it faced due to the “continual declining international shipping market, especially the severe situation in the international dry-bulk shipping market.”
China Cosco came under pressure last year as slowing growth, prompted in part by the introduction of tightening policies in China and other Asian countries, hit demand for commodities. Locked into charters for bulk carriers signed near the height of the global shipping boom before 2009, the company began halting or delaying payments to ship owners in the first half in a widely criticized tactic to renegotiating contracts.
Three ships were seized before the company resumed payments.
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
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