China Shipping container profit falls

China Shipping container profit falls China Shipping Container Lines Co., the country's second-largest cargo-box carrier, said first-half profit dropped 45 percent after fuel costs surged and the global economic slowdown stunted demand. Net income fell to 637.2 million yuan ($93 million), or 0.05 yuan a share, from a restated 1.16 billion yuan, or 0.12 yuan, a year earlier, the Shanghai-based company said in a Hong Kong stock exchange statement late yesterday. Sales increased 4.8 percent to 18.2 billion yuan.

China Shipping follows Orient Overseas (International) Ltd. and Neptune Orient Lines Ltd. in reporting lower profit because of higher fuel costs and slower demand in the U.S. and Europe. The company also said it's hard to be optimistic about the rest of the year because of the world economy and excess capacity in the global fleet.

The second-half doesn't look great as the economic slowdown will curb Christmas sales,'' said Jack Xu, a Sinopac Securities Asia Ltd. analyst in Shanghai. Freight rates are not good as overall demand in Europe and the U.S. is weak.

Container Volume

China Shipping's container volume rose 7.3 percent in the first half to 3.6 million boxes in the first half. Traffic on domestic routes gained 13 percent, European shipments declined 2.1 percent and transpacific shipments plunged 12 percent.

The shipping line fell 1.5 percent to HK$1.94 in Hong Kong trading, before yesterday's earnings announcement. The stock is down 58 percent this year, compared with the benchmark Hang Seng Index's 24 percent decline. Its Shanghai shares have plunged 70 percent to 3.63 yuan.

China Shipping paid an average of $540.61 per ton for fuel in the first half, 67 percent more than a year earlier, it said.

The surging oil price cut gains significantly, said Xu. The price of 380 Centistoke bunker fuel, used by ships, hit a record high of $764.50 on July 15 in Singapore trading. It has since slipped 12 percent in line with falling oil prices.

The company will buy its parent's terminal unit for 2.6 billion yuan to add facilities in 14 Chinese ports, it said on Aug. 6. The purchase will enable the container line to reduce handling costs as it grapples with rising fuel prices and slowing export growth.

Neptune Orient, Southeast Asia's largest container-shipping company, reported a 19 percent decline in second-quarter profit, the first drop in five quarters. First-half operating profit at Orient Overseas, Hong Kong's largest container line, fell 27 percent. Net income plunged 93 percent after a year-earlier one- time gain.

Under domestic accounting standards, China Shipping Container's net income fell 43 percent to 699 million yuan.