China Cosco Narrows Loss as Asset Sales Offset Shipping Slump

China Cosco Holdings Co. (1919), the nation’s biggest shipping company, narrowed its first-half loss as gains from selling assets helped offset a freight-rate slump. 

The net loss in the six months to June was 990 million yuan ($162 million), compared with 4.87 billion yuan a year earlier, the company said in a filing to the Shanghai Stock Exchange today. Sales fell 13 percent. 

China Cosco is restructuring assets in a bid to return to profit as a third straight annual loss may result in its shares being delisted in Shanghai. The company had a gain of 3.13 billion yuan in the first half from the sale of assets including a a logistics unit, as shipping lines struggled with overcapacity. 

Cosco’s container-shipping unit, Asia’s second-biggest, posted a net loss of 2.24 billion yuan while its commodity-carrying arm had a net loss of 1.82 billion yuan, according to the statement. 

China Cosco fell 0.3 percent to HK$3.43 in Hong Kong trading, before the earnings were released. The stock has dropped 10 percent this year. 

“The imbalance between demand and supply in the international shipping market had no material improvement,” the company said in the statement. “We will continue to work toward the target of turning around this year, which is our top priority.” 

?    Container Volume 

Revenue from shipping containers fell 1.4 percent even though Cosco moved 8.7 percent more boxes, as average rates declined from a year earlier, especially on the Asia-Europe route, according to the statement. 

Carriers competed to fill their ships. Commodity-shipping volumes dropped 3.5 percent from a year earlier and the average of Baltic Dry Index (BDIY), the benchmark for commodity-moving rates dropped 11 percent during the period, the company said. 

China Cosco booked a net gain of 1.85 billion yuan from selling the logistics unit. It also had a gain of 1.28 billion yuan through the sale of its stake in China International Marine Containers Group Co. (2039) by group company Cosco Pacific Ltd. (1199), in which it owns 43.21 percent, according to Bloomberg calculation. 

China Cosco had a fleet of 332 owned and leased dry-bulk ships as of June 30, compared with 380 six months earlier, according to the statement. It also had another 15 dry-bulk ships on order. Its container-ship fleet totaled 187 ships, with another 10 on order.