Asia/Pacific News
Merger Speculation Carriers China COSCO, CSCL Post Contrasting 2015 H1 Results
The two Chinese state-owned carriers at the centre of intense merger speculation have posted contrasting results for the first half of 2015.
China COSCO Holdings Company Limited (China COSCO) posted its results showing a 183 percent increase in net profit year-on-year, while China Shipping Container Lines Co., Ltd's (CSCL's) results show a slide in net profit of 97.5 percent for the same period.
Neither company made mention of a merger in their respective reports, and there is still no official word over the rumours that have now been dragging on for several months other than that COSCO is in the "planning process" for a "material event."
With a net profit of RMB1,896,668 ($298 million) in the first half of the year, compared to a loss of RMB2,276,732 ($357 million) last year, China COSCO's bottom line was given a significant boost with RMB3,708,286 ($580 million) in government subsidies that, according to a report by JOC, were used to help it scrap older vessels.
Had China COSCO not received the subsidies, the company would have likely finished out the period with a loss.
Meanwhile, CSCL saw its revenue decline by 8.2 percent, to which it attributed to weak Asia-Europe and Mediterranean container freight rates and overcapacity.
"Freight rates for Asia-Europe trade lanes hit record low levels under the impact of new shipping capacity put into market amid a weak economic growth momentum in the eurozone," said CSCL.
"In second half of 2015, international trade still won't be cheerful."
During the period, CSCL is said to have carried just under 4 million TEU, a modest 1 percent increase year on year.
China COSCO also saw its revenue fall to $4.6 billion, an 8 percent decline compared to the same period in 2014, although container shipping revenues were said to hold relatively close to last year's at $3.6 billion.
China COSCO's container unit is said to have seen container volumes grow to 4.8 million TEU, a 6.8 percent increase compared to the same period in 2014, although revenue per TEU fell 1.7 percent to $677.
Last week, Drewry Shipping Consultants Limited (Drewry) said if a rumoured merger goes ahead, it could cause a "domino effect" on carrier alliances and future carrier mergers in Asia, with the potential to be damaging to industry competition.
