OOIL back in black with US$53.6 million H1 profit ahead of Cosco merger


HONG KONG'S Orient Overseas (International) Ltd, parent of container line OOCL, has reversed itself from last year's first half net loss of US$56.6 million with a profit of $53.6 million net profit drawn on revenues of $2.89 billion, up 12.8 per cent year on year.

The company, which was recently acquired, pending regulatory approval by Cosco Shipping Group, said its first half experience a slow, steady recovery from the tough market conditions that characterised 2016. 

"This is not a sign of a booming market - we are far from that. However, it does mean that for the first time since the onset of the Global Financial Crisis, the supply demand balance is not worsening," said OOIL chairman CC Tung.

"Healthier demand growth has reappeared. Improving data, and improving sentiment gives us comfort as to the sustainability of this better environment," he said. 

Mr Tung also noticed a slowdown in supply side growth. "Scrapping occurred at a record rate in 2016, continuing at approximately the same pace in 2017 year to date. Orders of newbuildings have been notably absent this year so far", he said.

Compared to the first half of 2016, OOCL liner liftings increased seven per cent and load factor by one per cent. Revenue levels per TEU increased by eight per cent, said the company statement accompanying the interim results. 

But the average price of bunker recorded by OOCL in the first half of 2017 was $306 per tonne compared with US$186 per tonne for the corresponding period in 2016. Both the fuel oil and the diesel oil price have rebounded from their lowest levels, leading to the increase in bunker costs by 64 per cent in the first half of 2017 compared with the corresponding period of 2016.

During the first half of 2017, the group took delivery of the first of its 21,413-TEU series of newbuildings from Samsung Heavy Industries in South Korea, namely the OOCL Hong Kong, now the world's biggest box ship. 

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$30 million as of June 30.

Of the merger, Mr Tung said it was an "opportunity for OOIL to continue to operate the OOCL brand, but as part of the China Cosco Shipping Group, and to bring together our operating model and our corporate culture with the competitive advantages of Cosco, including its size and scale, capital base, growing fleet and extensive port investments, to name but a few. This would create a combined group that would have a very strong chance of maintaining and building a status as one of the very best performers in an industry now entering a new phase."

Source: Schednet 

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