OOCL Earnings Up 400% as Bunker Costs Fall by Over $100M

Bunker costs fell over $100 million in 2014

Orient Overseas International Limited (OOIL) Monday announced its full year results for 2014, reporting a more than 400 percent year-on-year jump in operating profit for its Container Transport and Logistics segment, shipper Orient Overseas Container Line (OOCL), driven partly by more than $100 million in bunker savings.

"Despite the increase in capacity and lifting, our operating costs continued to improve," said Tung Chee Chen, OOIL Chairman.

"A reduction in total bunker cost of 10%, attributable to both decrease in bunker price and consumption, was achieved."

In 2013, OOCL spent $1.13 billion on bunkers, suggesting that bunker savings in 2014 contributed over $100 million of the uplift in profitability.

OOIL reported a 5.5 percent year-on-year increase in liftings for OOCL to 5.5 million twenty-foot equivalent units (TEU), while revenue grew 3.5 percent.

OOIL group revenue, of which OOCL contributed 99 percent in 2013, was $6.52 billion for the year.

Operating margins were thin at 4 percent as operating profit (earnings before interest and taxation, or EBIT) for OOCL hit $249 million in 2014 compared to prior year results of $57.4 million and $228.8 million in 2012.

The group took delivery of two 'Mega' Class 13,208 TEU new vessels from the Geoje shipyard of Samsung Heavy Industries Co., Ltd. in South Korea during the year, while its load factor increased from 73 percent to 76 percent.

"In 2014, the G6 Alliance extended its network with services covering all major East West trades and opened the Singapore based Service Center to ensure that product quality is consistent and at the highest level," added Tung.

"Looking forward, we will continue to work with alliance members to ensure efficiency, quality and competitiveness."

In December OOCL was said to be among shippers enquiring about newbuild ships of up to 20,200 TEU capacity.