09-08-2016

OOIL posts US$56.7 million H1 net loss as revenue sinks 16.7pc

OOCL

HONG KONG's Orient Overseas (International) Limited (OOIL), whose principal holding is Orient Overseas Container Line (OOCL), has declared a first half net loss of US$56.7 million (against last year's US$238.6 million profit), drawn revenues of $2.54 billion, down 16.7 per cent year on year.

First half OOCL liftings increased five per cent year on year and load factor was up one per cent, but revenue dropped 17 per cent, said the company statement accompanying the interim results report. 

"Average revenue levels in some trade lanes reached new post-Global Financial Crisis lows, with an average revenue per TEU drop of 21 per cent in the first half," said the OOCL statement.

Said OOIL chairman CC Tung: "Looking ahead, the second half of 2016 will be challenging and difficult. Market conditions in the first six months of 2016 have been difficult." 

"The world may very well need to adjust to a 'new normal' where unexciting growth and a low interest environment become the norm, at least for a half decade," he said. 

In the meantime, the polarisation of domestic politics, the rise of populism, and the tendency towards 'turning inwards' for many nations may also translate into a slow down in globalisation." said Mr Tung.

He also said that the British Brexit referendum result might lead to further delay in investment in Europe, especially if negotiations between the UK and EU on their future prove to be protracted. 

"Violence in Europe and geopolitical conditions in the Middle East and South China Sea have injected another layer of cautiousness to sustained corporate activities and investment," he said.

"Although fuel costs have risen considerably since the remarkable lows of the first few months of 2016, they remain far lower than in recent years," he said.

The average price of bunker recorded by OOCL in the first half of 2016 was US$186 per ton compared with US$352 per ton for the corresponding period in 2015. In the first half of 2016, fuel costs decreased by 41 per cent when compared to the corresponding period in 2015.

In the first half of 2016, no new-build vessels were delivered, and no new orders were placed by OOCL. For six 20,000-TEU class newbuild vessels contracted with Samsung Heavy Industries Co Ltd in South Korea, they are expected to be completed by the end of year 2017.

"OOCL Logistics is a business focus for the group. The combination of a soft market environment, intense competition, and changing trade patterns brought about both lower margins and service challenges for the industry," he said. 

The group's property investments include its long-standing ownership of Wall Street Plaza located in New York. Wall Street Plaza continues to record steady results and based on an independent valuation, has been re-valued upwards by US$10 million as at June 30 to reflect an assessed market value of US$210 million. A

The group continues its investment in Beijing Oriental Plaza directly through holdings in the Hui Xian REIT and indirectly through Hui Xian Holdings Ltd., which holds units in the Hui Xian REIT. 

Source: Schednet

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