Cosco Pacific First-Half Profit Triples

Revenue was US$395,195,000 (corresponding period of 2012: US$367,355,000), an increase of 7.6%. The revenue was derived from the terminal business and the container leasing, management and sale businesses. The revenues of the two core businesses increased by 9.7% and 5.7% to US$217,066,000 (corresponding period of 2012: US$197,806,000) and US$180,234,000 (corresponding period of 2012: US$170,569,000) respectively.
Gross profit was US$172,978,000 (corresponding period of 2012: US$165,470,000), an increase of 4.5%, as gross profit of both the two core businesses increased. During the period, the gross profit margin of the container leasing, management and sale businesses remained stable. However, the gross profit margin of the Group dropped by 1.2 percentage points to 43.8% (corresponding period of 2012: 45.0%) as a result of higher initial operating costs arising from Xiamen Ocean Gate Container Terminal Co., Ltd. (" Xiamen Ocean Gate Terminal" ), which commenced operation in May 2012.
On 20th May 2013, the Group announced the disposal of its 21.8% equity interest in China International Marine Containers (Group) Co., Ltd. (" CIMC" ) for a cash consideration of US$1,219,789,000, which was completed on 27th June 2013, resulting in a net gain of US$393,411,000. The disposal offers a good opportunity for the Group to focus resources on its two core businesses, with a view to improving its profitability and creating enhanced value for shareholders in the medium-to-long term.
Profit attributable to equity holders of the Company rose by 213.1% to US$560,292,000 (corresponding period of 2012: US$178,925,000). Excluding the share of profit from CIMC, a discontinued business, and the net gain on the disposal of its equity interest in CIMC, profit attributable to equity holders of the Company dropped by 3.6% to US$143,822,000 (corresponding period of 2012: US$149,174,000).
An interim dividend is HK18.6 cents (corresponding period of 2012: HK20.5 cents) per share and a special interim dividend of HK43.8 cents (corresponding period of 2012: Nil) per share as a result of the disposal of 21.8% equity interest in CIMC were declared. The dividends will be paid in cash and with a scrip dividend alternative, with a payout ratio of 40.0% (corresponding period of 2012: 40.0%).
Profit from the terminal business decreased by 5.1% to US$92,830,000 (corresponding period of 2012: US$97,841,000). The decrease was mainly attributable to a rise in income tax expenses for some terminals in mainland China following the expiry of tax holidays, an increase in the loss of Xiamen Ocean Gate Terminal compared with the corresponding period of last year as it is still in a ramp-up period, as well as increased operating costs of the terminal business. Equity throughput increased by 8.2% to 8,201,200 TEU (corresponding period of 2012: 7,581,363 TEU). Total throughput increased by 9.7% to 29,494,353 TEU (corresponding period of 2012: 26,876,860 TEU).
Profit from the container leasing, management and sale businesses rose by 4.8% to US$76,291,000 (corresponding period of 2012: US$72,766,000). The increase was mainly due to an expansion of the container leasing fleet. The container fleet size increased by 4.3% to 1,874,826 TEU (30th June 2012:
1,797,377 TEU), with an overall average utilisation rate of 94.5% (corresponding period of 2012: 95.2%)
The Group's share of profit from CIMC during the period included the profit for the period from January to May as the disposal of its equity interest in CIMC was completed in June, being US$23,059,000 (January to June of 2012: US$29,751,000), a decrease of 22.5%
Operational Review
According to a report published by the International Monetary Fund in July 2013, the global economic growth remained weak in the first half of 2013, with prolonged economic recession in Europe and sluggish growth of the United States. The growth of China's economy and foreign trade further slowed down due to continued weakness in the external economy and a decline in local demand. According to the statistics from the Chinese Ministry of Commerce, the growth in China's imports and exports was 5.3% and 4.5% respectively in the first half of 2013. In addition, statistics from the Chinese Ministry of Transport showed that in the first half of 2013, the growth in the throughput of China's container ports slowed down to 8.3% from 8.8% in the corresponding period of last year. During the period, the Group maintained a stable growth in the total container throughput of its terminals. However, the terminal business recorded a decrease in profit as a result of rising costs. In respect of the container leasing business, the expansion of its container leasing fleet continued to drive growth in revenue and profit from container leasing.
Terminals
Profit from the terminal business decreased by 5.1% to US$92,830,000 (corresponding period of 2012: US$97,841,000). Primarily due to a rise in income tax expenses for Qingdao Qianwan Terminal and Shanghai Pudong Terminal following the expiry of tax holidays, the Group's share of profit from Qingdao Qianwan Terminal and Shanghai Pudong Terminal decreased by 21.8% to US$14,362,000 (corresponding period of 2012: US$18,370,000) and by 22.8% to US$8,381,000 (corresponding period of 2012: US$10,853,000) respectively. In addition, the loss of Xiamen Ocean Gate Terminal increased compared with the corresponding period of last year as it is still in a ramp-up period. As a result of the impact of a strike and rising costs, profit contribution from COSCO-HIT Terminal decreased by 18.6% to US$9,750,000 (corresponding period of 2012: US$11,979,000).
Revenue from the terminal business grew by 9.7% to US$217,066,000 (corresponding period of 2012: US$197,806,000). Xiamen Ocean Gate Terminal, which commenced operation in May 2012, recorded revenue of US$9,882,000 (corresponding period of 2012: US$1,857,000) during the period, contributing to the growth in revenue from the terminal business for the first half of 2013. In addition, revenue from Piraeus Terminal and Guangzhou South China Oceangate Terminal grew by 5.4% to US$73,330,000 (corresponding period of 2012: US$69,545,000) and by 4.0% to US$61,725,000 (corresponding period of 2012: US$59,333,000) respectively.
The demand for consumer products in Europe and the United States remained weak, creating a greater impact on the throughput of major container ports in the Pearl River Delta and the Yangtze River Delta in China. Ports in the Bohai Rim region still outperformed those in the aforesaid two regions, on average.
In the first half of 2013, COSCO Pacific maintained a stable growth in its total container throughput, which rose by 9.7% to 29,494,353 TEU (corresponding period of 2012: 26,876,860 TEU). The Group's terminal companies in mainland China handled a total of 24,377,866 TEU (corresponding period of 2012: 22,302,104 TEU), up 9.3%. Equity throughput of the Group was up 8.2% to 8,201,200 TEU (corresponding period of 2012: 7,581,363 TEU).
Source: Cosco Pacific Group