Asia/Pacific News
Low Bunker Prices Helps Intra-Asia Player Post Profit in 2015 Despite Tough Markets
Hong Kong-listed SITC International Holdings Company Ltd. [HKEX: 1308] (SITC) Friday announced its year end financial results for 2015, declaring low bunker prices helped it to an improved profit in a year that has been troubling for many shippers.
The company reported a profit of US $144.2 million in 2015, an increase of 19.1 percent from the US $121.1 million posted a year ago.
The company announced that the cost of sales for the group decreased by approximately nine percent from a year ago, falling to US $1,102.5 million in 2015 from US $1,210.9 million last year.
The decrease was primarily attributable to a decrease in bunker costs, which fell to $145 million in 2015 from $234.8 million in 2014.
The company also reported a decline in the amount of bunkers held as assets on its balance sheet, with the dollar amount on that account dropping from US $17 million in 2014 to US $10.7 million in 2015.
Overall, the financial boost from the lower bunker prices ultimately helped cushion a 6.7 percent slide in revenues to US $1,284.6 million.
In a review of market conditions the company described the economic and trade environment in 2015 as "volatile" globally, and slowing in Asia, as intensified market competition and decreasing shipping prices resulting from overcapacity and cost reduction cut into revenue.
"Despite so, the intra-Asia container shipping market (which is the focus of the Group’s sea freight logistics business) still maintained a remarkable growth benefiting from higher economic and trade growth in the PRC and Southeast Asian countries," said SITC.
Looking ahead the company predicted that the global shipping industry is expected to face various "difficulties and challenges in 2016", but the group's management remains confident about the business environment in intra-Asia container shipping and logistics in the year of 2016.
SITC says it will continue to expand its intra-Asia business.
In June of 2015 Ship & Bunker reported that Malaysia-based CIMB Research had downgraded the regional container shipping sector (including SITC) from "neutral" to "underweight" as a result of carriers that were "wasting" the windfall from lower bunker prices.
