COSCO to expand its fleet by 44%
Updated: 2008-04-24 07:07
By Karen Cho(HK Edition)
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Shipping giant China COSCO Holdings will add 64 vessels to its fleet of 144 container ships this year to meet rising demand.
China's top shipping liner plans to raise its 2008 capital expenditure by 37 percent to 23.3 billion yuan to expand its fleet and port investments.
China COSCO's net profits more than doubled last year, shooting up 134 percent to bring in 19.5 billion yuan, compared with 8 billion yuan in 2006.
The significant increase in profits was mainly attributable to China COSCO's acquisition of a subsidiary owned by its parent company, COSCO Group, which owns the world's largest dry-bulk shipping fleet.
The substantial rise in dry-bulk fleet boosted the revenue generated from this segment by 78.9 percent last year, bringing in a staggering 49 billion yuan. This represented 46 percent of China COSCO's 2007 total revenue of 107 billion yuan.
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COSCO plans to raise its 2008 capital spending by 37 percent to 23.3 billion yuan in an effort to expand its shipping fleet and port investments. Reuters |
The shipping company has entered into long-term cargo contracts with major mainland steel manufacturers such as Shougang and Baogang groups to ensure sustained profits for the dry-bulk business.
China COSCO Executive Director Chen Hongsheng said that the dry-bulk business, which involves the shipping of raw materials such as iron ore, coal and grain, is likely to see stable growth this year.
"A global economic slowdown may affect this business to a certain extent," Chen said. "But growth in countries such as China and India remain strong, fueling demand for these raw materials."
China COSCO's other major business - container shipping - also experienced a healthy revenue growth of 14.4 percent to bring in 45 billion yuan. The negative impact on the company's Trans-Pacific route, due to the slackening US economy, was pared off by a continual strong demand from Asian and European countries.
Chen said the firm will place a strategic focus on expanding its Asia-Europe route.
And given that oil prices continue to soar, China COSCO Executive Vice-President Sun Jiakang said the firm has been running all of its container ships at 10 percent slower for the past two months to save fuel.
"There will be impacts on transport time, but our measure received resounding support from our clients," Sun said.
China COSCO Chairman Wei Jiafu said yesterday at the company's results announcement that the measure will save 350,000 tons of fuel a year and lower fuel emissions by 1 million.
"Through this measure we will not only be able to control costs, but also exercise social responsibility by cutting emissions," Wei said, adding that the company will also cut fuel usage through new new technology, and it plans to share any increased costs with clients via fuel surcharges.
China COSCO shares jumped 7.95 percent, or HK$1.65, to close the trading day at HK$22.40. The company plans to announce its first quarter results next week.
(HK Edition 04/24/2008 page2)