COURAGE MARINE: Confronting lower BDI in first half
COURAGE MARINE Group Ltd (HK 1145; SGX: CMG) said it faced a challenging January-June period in which the Baltic Dry Index (BDI) plummeted some 57% from year-earlier levels.
This resulted in revenue decreasing by approximately 65% year-on-year to 10.1 mln usd in the first half.
As such, the group recorded a net loss of 9.9 mln usd in the first half of 2011 compared to a net profit of 8.2 mln in the first half of 2010.
“The vessel chartering services of the group rely heavily on spot charter contracts. The decrease in revenue was mainly due to the political instability in the Middle East leading to concerns about global oil supply and substantial increase in bunker price, being one of the major variable costs, which discouraged the group from taking orders negotiated with lower freight rates,” said Courage Marine Chairman Hsu Chih-Chien.
He added that the over-supply of vessels within the Asian region caused by cutting of cargo shipments to and from Japan as a result of the Japanese earthquake, tsunami and nuclear crisis led to a decrease in the demand for the group’s chartering services since March.
“This led to a decrease in the overall utilization rate of the group’s vessels. Given the approximate 57% decrease in the Baltic Dry Index (BDI) from the average of 3,100 points for the first half of 2010 to the average of 1,400 points for the first half of 2011, our revenue decreased by 65% in the first half of 2011 because of a decrease in freight rates.”
The group’s cost of sales decreased by only 14% to 17.2 mln usd due to lower fixed costs including insurance, crews fee and depreciation expenses.
Therefore, Courage Marine recorded a first-half gross loss of 7.1 mln usd compared to gross profit of 9.1 mln a year earlier.
“The global economy has not fully recovered and has remained unstable over the past few months” Chairman Hsu said.
He added that the BDI, which has a close correlation to freight rates, remains flat, hovering between 1,250 and 1,500 since April 2011, and was only around 1,250 points in August.
“The group remains cautious on the outlook for this year. We expect that the financial performance for the rest of 2011 to be adversely affected by the current challenging economic conditions and uncertain outlook.
“However, Courage Marine will maintain its cost-effective structure and focus on keeping its fleet well-deployed and running efficiently,” Chairman Hsu asserted.
The board of directors does not recommend the payment of any interim dividend for the six months ended June 30, 2011.
COSCO PACIFIC: PRC Demand Drives 1H Sales Up 25.2%
CONTAINER TERMINAL operator Cosco Pacific Ltd (HK:1199) grew its revenue 25.2% to 279 mln usd on strong PRC business.
Revenue from terminal business and container leasing, management and sale businesses recorded growths of 44.8% to 149.5 mln usd and 8.3% to 129.3 mln, respectively.
Gross profit rose by 71.0% to 119.3 mln usd attributable to the profitability turnaround of Piraeus Container Terminal S.A., a wholly-owned subsidiary since September 2010, and the reclassification of Guangzhou South China Oceangate Container Terminal Co Ltd from a jointly controlled entity to a subsidiary starting from January 1, 2011.
Including nonrecurring items, profit attributable to equity shareholders rose by 24.8% to 237.0 mln usd in the first half.
An interim cash dividend of 27.2 HK cents per share was distributed compared to 13.7 cents a year earlier, maintaining the dividend payout ratio at 40.0%.
Profit from Cosco Pacific’s terminal business grew significantly by 144.3% to 96.7 mln usd.on the back of an increase in equity throughput of 31.0% to 6,537,508 TEUs, an approximately additional 10% stake in Yantian International Container Terminals Co Ltd, and profitability turnarounds by Piraeus Terminal and Guangzhou South China Oceangate Terminal.
Total first half throughput increased by 19.7% to 24,249,265 TEUs.
Profit from container manufacturing business increased by 238.8% to 91.3 mln usd.
“In the first half, COSCO Pacific’s terminal business, container leasing, management and sale businesses and container manufacturing business continued to benefit from the steady growth of the global container shipping volume and recorded solid results,” the company said.
As for the terminal business, Cosco Pacific said it expects a steady growth of container throughput in the second half of the year and that terminal companies with outstanding performance in the first half of the year will continue to drive the growth of total throughput.
“In addition, the terminal tariff of Mainland China ports has been adjusted upwards in the first half of the year. Management is confident that the terminal business will continue to achieve satisfactory results in the second half of the year.”
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