China COSCO Announces 2006 Interim Results.HONG KONG Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. -- China COSCO COSCO China Ocean Shipping Company COSCO Colorado Scientific Company (Denver) Holdings Company Limited (HKEx HKEx Hong Kong Exchanges and Clearing Limited :1919): Highlights --The Group's container shipping volume reached 2,426,703 TEUs in the first half of 2006, up 12.5% over the same period of last year. --As of 30 June June: see month. 2006, the Group operated a fleet of 139 container vessels, with the shipping capacity of 381,039 TEUs, ranking the fifth largest container shipping company in the world. --Excluding the impact of fuel, costs per TEU TEU Twenty-Foot Equivalent Units (intermodal shipping container) TEU Technical Escort Unit TEU Technical Escort Unit (Army) TEU Tactical Enforcement Unit TEU Treaty of European Union were down 6% from the same period of 2005, as the result of the Group's stringent cost controls. --The Group's container terminals A container terminal is a facility where cargo containers are transhipped between different transport vehicles, for onward transportation. The transhipment may be between ships and land vehicles, for example trains or trucks, in which case the terminal is described as a handled 14,974,748 TEUs of containers, representing an increase of 23.5% over the same period of last year. --As of 30 June 2006, the Group owned and managed a container fleet of 1,111,336 TEUs, recording an increase of 8.1% from a year ago, which ranks the third in the world. --The Group continued to maintain a solid capital structure, with the net debt to equity ratio The debt to equity ratio (D/E) is a financial ratio indicating the relative proportion of equity and debt used to finance a company's assets. It is equal to total debt divided by shareholders' equity. going down to 15.2%, in order to lower the cost of capital and fund future growth. --As of 30 June 2006, the Group's balance of cash reached RMB RMB Right Mouse Button RMB Regional Management Board (USACE) RMB Rolf Maier Bode (musician, band) RMB Ren Min Bi (currency of People's Republic of China) 13,206,120,000, representing an increase of 62.1% over the year end of 2005.
Results Summary
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1H2006 1H2005 Change
RMB'000 RMB'000
Turnover 18,469,554 18,576,762 -0.6%
Operating Profit 1,871,173 3,995,665 -53.2%
Profit before income tax 2,045,532 4,424,822 -53.8%
Profit attributable to equity
holders of the Company 978,065 2,772,796 -64.7%
Basic earnings per share (RMB) 0.159 0.674 -76.4%
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China COSCO Holdings Company Limited, ("China COSCO" or "the Group" HKEx:1919) a leading global provider of integrated container shipping services and the largest container shipping company in China, announced its financial results for the six months ended 30 June 2006. In the first half of 2006, the Group's turnover was RMB18,469,554,000 a slight decrease of 0.6% over the same period in 2005. Profits attributable to equity holders for the period were RMB978,065,000, down 64.7%. Earnings per share were RMB0.159, down 76.4% from the same period in 2005. The Board did not recommend the payment of interim dividend. During the period under review, profits from container shipping and related businesses declined by 74.1%. The impact was partially offset by other segments of the Group's business, particularly the container leasing business, which experienced strong demand, leading to upward forth on prices and volumes during the period. Together with the profits from the disposal of containers of Florens, it made a positive contribution to the Group's profits as a whole. Chairman Wei Wei, river, China Wei (wā), river, c.450 mi (720 km) long, rising in SE Gansu prov. and flowing E through Gansu and Shaanxi provs. to the Huang He. Jiafu commented: 'The decline in overall earnings reflects market pressures in container shipping, one key area of the Group's business. As an integrated shipping and logistics service provider, however, the Group has been able to hedge risk through occupying businesses across the container shipping value chain. The Group has successfully developed its integrated business model in order to balance the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. interplay in·ter·play n. Reciprocal action and reaction; interaction. intr.v. in·ter·played, in·ter·play·ing, in·ter·plays To act or react on each other; interact. of trends in market'. Review of Operations by Segment Container Shipping Business In the first half of 2006, container shipping and related businesses of the Group had profits of RMB732,868,000, representing a 74.1% decrease. Decrease in profits was mainly due to a decline in freight rates Noun 1. freight rate - the charge for transporting something by common carrier; "we pay the freight"; "the freight rate is usually cheaper" freightage, freight and increase in bunker bunk, bunker large storage bin. bunk forage forage, usually ensilage stored in a large storage bunk and made available to cattle or other livestock along a face of the storage. prices. The Group's shipping volume was 2,426,703 TEUs in the first half of 2006, an increase of 12.5% over the same period in 2005. Shipping volumes on all major routes experienced growth. Since the end of 2005, its membership in the CKYH alliance has enabled the Group to increase global service routes and expand service coverage. As of 30 June 2006, the Group operated a fleet of 139 container vessels. Shipping capacity was 381,039 TEUs, an increase of 18.18% over the end of last year.
Shipping volume by markets
Six months ended 30 June
2006 2005 Change
TEU TEU %
Trans-Pacific 612,881 551,161 11.2
Asia-Europe (including the
Mediterranean) 551,431 493,514 11.7
Intra-Asia (including Australia) 760,218 659,611 15.3
Other international (including Trans-
Atlantic) 376,023 336,621 11.7
PRC 126,150 115,925 8.8
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Total 2,426,703 2,156,832 12.5
Turnover by markets
Six months ended 30 June
2006 2005 Change
RMB'000 RMB'000 %
Trans-Pacific 6,147,999 5,803,601 5.9
Asia-Europe (including
Mediterranean) 4,100,027 4,667,277 -12.2
Intra-Asia (including Australia) 2,831,515 2,903,706 -2.5
Other international (including
Trans-Atlantic) 1,214,020 1,319,942 -8.0
PRC 735,782 801,639 -8.2
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Sub-total 15,029,343 15,496,165 -3.0
Chartered out 94,979 215,616 -55.9
Income of related business 2,644,123 2,208,517 19.7
----------- ----------- ---------
Total 17,768,445 17,920,298 -0.8
During the first half of the year, freight rates declined on most routes, especially on the Asia-Europe routes. As a result, revenue per TEU declined by 13.8%, compared with the same period in 2005. A substantial increase in bunker costs caused an increase in operating costs operating costs npl → gastos mpl operacionales of 17.0% to RMB 16,662,474,000. Although the Group was able to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. cost pressure through the
use of futures contracts Futures ContractAn exchange traded agreement to buy or sell a particular type and grade of commodity for delivery at an agreed upon place and time in the future. Futures contracts are transferable between parties. and energy-efficient practices, bunker costs rose by 69.7% over the corresponding period in 2005 and accounted for 71.2% of the total increase in costs of the Group's container shipping business. The increase in expenditure for fuel had an obvious adverse impact to the Group's earnings. During the period, due to additional capacity from newly chartered vessels, there was an increase in vessel costs of 21.2%. The increase in vessel costs accounts for 21.6% of the increase in total container shipping costs. The Group implemented a number of cost control measures with good results. These included introduction of a lean management process, further improvements in route planning, and adjustment of certain transshipment Transshipment The passing goods from one ocean vessel to another. ports. These measures effectively reduced costs for equipment, transshipment and port charges, expedited container turnover time, and improved utilisation rate. During the period, the costs for equipment and cargo transshipment increased slightly by 0.8% over the same period of 2005. On a unit basis, however, this major item of costs declined by 10.4%. The overall cost per TEU increased by 3.6% as compared with the same period of last year. Excluding the impact of fuel, costs per TEU were down 6% from the same period of 2005. The Group responded to market pressures in the first half of the year with a number of pricing and marketing promotion strategies. The Group focused on improving services for core customers and looked for ways to develop customized services by market segment. On 10 July 2006, the Group acquired shares in COSCO Philippines Shipping, Inc. and COSCO (HK) Cargo Service Co., Limited, originally held by COSCO Group. Acquisition of these entities has expanded the Group's service coverage. Continue to Develop Emerging Markets To better utilise increased capacity and expand its customer base, the Group dedicated resources and expanded its service coverage in fast growing markets including Central America Central America, narrow, southernmost region (c.202,200 sq mi/523,698 sq km) of North America, linked to South America at Colombia. It separates the Caribbean from the Pacific. , the Caribbean, the Red Sea, Vietnam, the Black Sea, and China. Continue to Develop IT System The Group launched a new cargo flow information system in 2006, which led to better management of costs and revenue. Meanwhile, COSCON has improved its budgeting and performance evaluation Performance evaluation The assessment of a manager's results, which involves, first, determining whether the money manager added value by outperforming the established benchmark (performance measurement) and, second, determining how the money manager achieved the calculated return measurement system, in order to provide more complete information to management. Enhancement of Shipping Capacity The Group's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. development plans require additional capacity to explore new markets. In the first half of 2006, six new container vessels with capacity ranging from 8,200 to 9,500 TEUs joined the Group's fleet. By the end of June 2006, the Group had an order book of 27 container vessels with an aggregate capacity of 175,769 TEUs. In June 2006, the Group placed an order for eight container vessels with a capacity of 5,100 TEUs each these vessels will be delivered in 2009-2010. In February 2006, the Group also chartered two container vessels with a capacity of 3,534 TEUs each and another two in May, with a capacity of 4,506 TEUs each, for delivery in 2008-2009. Terminal and Related Businesses Strong growth in global trade led to robust increases in throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. in the Group's container terminal business. In the first half of 2006, the Group, through COSCO Pacific, handled 14,974,748 TEUs of containers, an increase of 23.5% over the previous year. As of 30 June, total number of berths in operation was 66, including 63 container berths and 3 bulk cargo That which is generally shipped in volume where the transportation conveyance is the only external container; such as liquids, ore, or grain. berths. During the period, revenue of terminal and related businesses was RMB85,775,000 with segmental segmental /seg·men·tal/ (seg-men´t'l) 1. pertaining to or forming a segment or a product of division, especially into serially arranged or nearly equal parts. 2. undergoing segmentation. results of RMB111,396,000. Profit from jointly controlled entities and associates amounted to RMB270,698,000 was achieved. Despite an increase in the volume of container handling and storage operations, earnings declined due to a combination of reasons. These included the sale of 17.5% interests in the Shekou terminal in 2005 as well as the replacement of four quay QUAY, estates. A wharf at which to load or land goods, sometimes spelled key. 2. In its enlarged sense the word quay, means the whole space between the first row of houses of a city, and the sea or river 5 L. R. 152, 215. cranes in COSCO-HIT, leading to a temporary retrenchment re·trench·ment n. The cutting away of superfluous tissue. of services. As at 30 June, the Group holds various interests in 23 terminal joint venture companies, with the total number of berth reaches 104, among which the number of container berths reaches 99, the number of berths for automobile reaches 2 and the number of multi-purpose berths reaches 3. The handling capacity of containers increases to 57,100,000 TEUs, representing an increase of 41.3% as compared with the same period of last year. On 26 July 2006, the Group participated in a joint venture, Tianjin Port Euroasia International Container Terminal Co., Ltd., which will develop and operate 3 berths in the container terminal of Tianjin North Port. The container terminal is expected to commence operation in 2008. On 8 June 2006, the Group invested in a joint venture, Ningbo Yuan Yuan (yüän), river, 540 mi (869 km) long, rising in S Guizhou prov. and flowing generally NE to Donting lake, Hunan prov., SE China. Navigation above Changde is limited by rapids to small craft. Dong Terminals Ltd. and will develop and operate berth No. 7 of Beilun Container Terminal Phase IV in Ningbo Port. The terminal is expected to commence operation in the fourth quarter in 2006. On 19 April 2006, the Group was transferred 10% shareholding in Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. Pudong Terminal and the shareholding it holds in Pudong terminal increased to 30%. On 8 August 2006, the Group signed a joint venture contract with Quanzhou Port Container Co., Ltd., to jointly establish Quanzhou Pacific Container Terminal Co., Ltd.. The joint venture will manage and operate the existing four container berths and will invest in building a container berth of 100,000 tons and a multi-purpose berth of 50,000 tons. The two berths are expected to commence operation in 2008. COSCO Ports (Quanzhou) Ltd. holds 71.43% shareholding in the joint venture. Container Leasing Business In the first half of 2006, the Group's container leasing business generated turnover of RMB1,123,135,000, up 2.5% from the previous year. Segmental results amounted to RMB771,046,000, representing an increase of 28.8% over the corresponding period of 2005. The Group got a pre-tax gain of RMB678,284,000 through the sale of containers available to international customers. During the period, due to delivery of new vessels and an increase in market demand for containers, leasing rates were firm, and average utilisation rate was 96.0% for the period. As of 30 June 2006, the Group owned and managed a container fleet of 1,111,336 TEUs, an increase of 8.1% over the same period of last year. Market share was approximately 10.7%, ranking No. 3 globally in the industry. The average age of the Group's container fleet was 4.38 years. During the period, the Group purchased 106,082 TEUs of new containers. On 20 June 2006, COSCO Pacific announced that it had entered into a sale agreement and various administrative services agreements with "AD ACTA" 634. VermOgensverwaltungsgesellschaft MBH MBH Mann Bradley Hughes (authors of paper on climate change) MBH Microscopic Black Hole MBH My Brain Hurts MBH Message Board Help MBH Mr. . Pursuant to the sale agreement, the Group disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of 600,082 containers. The Group will provide administrative services to the sold assets pursuant to the administrative services agreements. The above disposal will not affect the Group's container leasing business. The Group will continue to purchase new containers and lease them to third parties. The Group is of the view that this transaction will benefit the business model and capital structure of the Group's container leasing business and will increase sources of income as well as lower operational risks. At the same time, it will assist the Group in raising its market shares in the container leasing business as well as maintaining a relatively light balance sheet size. Logistics Business In the first half of 2006, COSCO Logistics geared up its marketing efforts to gain further inroads inroads Noun, pl make inroads into to start affecting or reducing: my gambling has made great inroads into my savings inroads npl to make inroads into [+ in logistics project development and to expand its market share in the home appliances, automobiles, electricity and petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. sectors. Net profits derived from the Group's logistics business amounted to RMB74,849,000, representing an increase of 18.5% over the same period last year. In the first half of 2006, COSCO Logistics has won a number of awards. COSCO Logistics was named the "Best Third Party Logistics Provider 2006" at the "Lloyd's FTB FTB Franchise Tax Board (California; they collect income and sales tax) FTB Family Tax Benefit (Australian welfare assistance) FTB First Time Buyer (housing) Asia 2006 -- China Logistics Awards" organized by Lloyd's FTB Asia. Other Businesses and Investments: Container Manufacturing From the end of 2005 to the first few months of 2006, container manufacturers have been in a weak market environment with reduced sales and prices. The profit contributions from China International Marine Containers (Group) Co., Ltd. ("CIMC CIMC Certified Investment Management Consultant (Institute for Investment Management Consultants) CIMC California Indian Manpower Consortium CIMC Club Internaute Montreal Cafe (Montreal, Quebec, Canada) ") to the Group decreased by 35.3% to RMB215,587,000. COSCO Pacific issued put options to all holders of the A-shares of CIMC as accepted inducement Inducement Electra incited brother, Orestes, to kill their mother and her lover. [Gk. Myth.: Zimmerman, 92; Gk. Lit.: Electra, Orestes] Hezekiah exhorts Judah to stand fast against Assyrians. [O.T. for the approval of the conversion of the CIMC Non-tradable Shares held by COSCO Pacific into publicly tradable on the Shenzhen Stock Exchange Shenzhen Stock Exchange One of two major securities markets in China. in the PRC. The combined effect of the initial recognition of the fair value and subsequent change in fair values of the options resulting in an increase of expense for a net amount of RMB511,305,000. Prospects During the second half of the year, the Group expects freight rates for container shipping to improve with the advent of the peak season. The Group believes that, so long as China COSCO strives for excellence, it will surely realise its potential and create value for shareholders. With favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. global economic prospects and the support of the "China factors", China COSCO is confident as it faces the opportunities and challenges of the second half of the year and beyond. 'We observed that the international container shipping business is still facing challenges due to the combined effects of several factors including the increase in fuel price. Despite the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. challenges, we are confident that the 'China factor' should continue to stabilize stabilize See peg. and drive the market. Looking ahead, the Group will continue to implement its operating strategy via system integration, enhancement in market strategy, continuous lean management and stringent risk control. We believe that our efforts will effectively maximize the operating efficiency, create a higher value for the Group and bring better return for our shareholders', concluded Capt. Wei Jiafu. About China COSCO: China COSCO Holdings Company Limited ("China COSCO"), (together with its subsidiaries, the "Group") was established in the PRC on 3 March 2005. It is the overseas listed flagship of China Ocean Shipping (Group) Company ("COSCO Group"), the second largest integrated shipping company in the world. China COSCO owns 100% of COSCO Container Lines Company Limited ("COSCON") and approximately 52% of COSCO Pacific Limited ("COSCO Pacific"). The Group is one of the leading global providers of integrated container shipping services to international and domestic customers. Its business includes the provision of a wide range of container shipping, container terminal, container leasing and freight forwarding and shipping agency services across the container shipping value chain. The Group was successfully listed in Hong Kong on 30 June 2005. Disclaimer (networking) disclaimer - Statement ritually appended to many Usenet postings (sometimes automatically, by the posting software) reiterating the fact (which should be obvious, but is easily forgotten) that the article reflects its author's opinions and not necessarily those of the : This press release may contain certain forward-looking information and/or information that is not based on historical data. Reliance on any forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. involves risks and uncertainties and that, although China COSCO believes that assumptions on which the forward-looking statements are based are reasonable, any or all of those assumptions could prove to be incorrect and as a result, the inclusion of forward-looking statements in this press release should not be regarded as representations by China COSCO concerning future performance of the Group and readers should not place undue reliance on such forward-looking statements. In addition, China COSCO undertakes no obligation to publicly update or revise any of these statements as a result of new information, future events or otherwise. |
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