Cosco Shipping warns industry outlook faces risks as 2018 profit halved
CHINA's state-owned Cosco Shipping Holdings has warned of trade frictions and high oil prices posing risks for the global shipping industry this year, after confirming that its net profit for 2018 fell by more than half
CHINA's state-owned Cosco Shipping Holdings has warned of trade frictions and high oil prices posing risks for the global shipping industry this year, after confirming that its net profit for 2018 fell by more than half.
Following its acquisition of OOCL, China's largest shipping conglomerate saw revenue and volumes surge. But rising costs resulted in the state-owned company's net profit attributable to shareholders sliding 53.8 per cent to CNY1.2 billion (US$178.83 million) last year from CNY2.7 billion a year earlier, Reuters reported.
The world's third largest container shipping line said revenue rose 33.6 per cent to CNY121 billion as demand for its container shipping and terminal business remained strong. However, its marine fuel costs rose in tandem with increases in global oil prices over the year, it added.
'Looking ahead to 2019, we are cautiously optimistic on the global economy and shipping situation,' the company's chairman Xu Lirong said in the statement.
'Many uncertainties such as trade frictions and high oil prices could negatively affect shipping. At the same time we also see some favourable conditions and positive factors,' he said.
These included China's stable economic growth and the government's flagship Belt and Road initiative, he added.
Cosco's outlook for 2019 comes as the global shipping industry slowly recovers from an oversupply of vessels that pushed the sector into a prolonged slump. Some firms merged to survive, while others went out of business.
Last month, German container shipping firm Hapag-Lloyd said volume growth and a modest recovery in freight rates in the second half of 2018 helped lift operating profit by 32 per cent.
However, there have been concerns that ongoing trade frictions between the US and China could harm the performance of shipping firms.
The world's largest container shipping company AP Moller-Maersk saw its share price skid more than 10 per cent last month after warning that trade headwinds would slow growth this year.