Evergreen Marine's Q2 net falls 35%

Evergreen Marine Corp., Asia's biggest container shipping line, posted a 35 percent decline in second-quarter profit because of a near-doubling of fuel costs and losses from affiliate EVA Airways Corp.

Net income declined to NT$829 million ($26 million) in the three months ended June 30, compared with a profit of NT$1.28 billion a year earlier. The figure was derived by subtracting first-quarter profit from six-month results released today.

Evergreen Marine was unable to pass higher fuel costs onto customers because of slower world trade and rising competition caused by the launch of new ships. Neptune Orient Lines Ltd., Asia's fourth-biggest container line, pared expansion plans after posting a 19 percent decline in second-quarter profit.

The shipping industry is in a slowdown, Bruce Tsao, an analyst at Capital Securities Corp. in Taipei, said before the announcement. Demand isn't good, so shipping companies can't raise rates. He has a neutral rating on Evergreen.

Higher fuel prices also caused EVA Air, Taiwan's second- biggest carrier, to post a first-half loss of NT$5.97 billion compared with a loss of NT$1.69 billon a year earlier. Taipei- based Evergreen owns a 19 percent stake in the airline.

Evergreen's second-quarter sales fell 21 percent from a year earlier to NT$5.7 billion, according to monthly filings to the Taiwan Stock Exchange. Revenue from affiliates and subsidiaries is counted separately. The group operates about 180 ships with a combined capacity of 640,000 standard 20-foot boxes.

First-Half Profit

First-half profit fell to NT$1.2 billion from NT$1.63 billion a year earlier, Evergreen Marine said in a stock exchange filing today.

The shipping line fell 3 percent to NT$18 on the Taiwan Stock Exchange before the announcement. The stock has fallen 39 percent this year, compared with a 17 percent drop for the benchmark Taiex index.

The price of 380 Centistoke marine bunker fuel, used by ships, rose 86 percent in Singapore trading in the year ended June, before hitting a record $764.50 a metric ton on July 15. It's since slipped 8.5 percent in line with falling oil prices.

Trade between Asia and Europe has declined this year after growing 17 percent in 2007 as the subprime meltdown reduced consumer spending and shipyards delivered more new vessels, according to Philip Damas, research director at Drewry Shipping Consultants Ltd. in London.

Container lines also scrapped plans to impose a $150 levy per cargo-box on Asia-Europe routes at the start of August because of weak demand, Lloyd's List reported on Aug. 15.

Neptune Orient, based in Singapore, will raise capacity 9 percent this year, down from an earlier plan for a 16 percent increase, it said on Aug. 7. China Shipping Container Lines Ltd., Asia's third-biggest, also plans to adjust capacity on Europe and U.S. routes after first-half profit fell 45 percent.

Yang Ming Marine Transport Corp., Taiwanese second-largest shipping line, said yesterday that it plans to sell 10 container vessels and halt two planned investments in Vietnam. The company has also delayed orders for six new ships.