Asia/Pacific News
COSCO Loss Down Slightly in 2012
China COSCO Holdings Company Limited (China COSCO) [HK:1919] reports a slight reduction in its net loss for 2012 of RMB 9.56 billion ($1.54 billion) on revenues of RMB 88.3 billion ($14.2), compared with an RMB 10.45 billion ($1.4 billion) loss on RMB 84.6 billion ($13.6 billion) in revenue the previous year.
The loss was worse than analyst expectations, Bloomberg reported.
"The year 2012 was a very tough year for China COSCO," the company said in a press release discussing the results.
Bunker costs for the year rose 11.1 percent to RMB 12.4 billion ($2.0 billion) and accounted for 26.3 percent of the operational costs for its shipping and related businesses, up from 25.4 percent in 2011.
It said it has been trying new programs to improve its performance, including new marketing efforts, stronger coordination among departments, centralised procurement and better benchmarking management, but acknowledged that the measures "have yet to be proven successful."
"We are disappointed to record a significant loss in 2012 as a result of oversupply in the market, low freight rate, high cost and imbalanced fleet composition," it said.
Volumes for the company's container shipping division rose 16 percent to 8 million twenty-foot equivalent units (TEUs), and the Asia-Europe routes improved particularly steeply, rising 21.4 percent to 2 million TEUs.
However, dry bulk shipments dropped 14.6 percent to 224.6 million tonnes.
The company predicts slower growth of the global economy in 2013, with increasing fleet capacity outpacing demand and keeping freight rates from recovering quickly.
China COSCO said it will work to improve its business in 2013 by restructuring route arrangements, improving product design, stepping up marketing efforts, and tightening cost control, "particularly on bunker cost."
Clarkson Plc has predicted that containership capacity will rise faster than demand in 2013, putting pressure on rates.
