COSCO Pacific profit sinks 13pc on high costs at new terminals
COSCO Pacific (1199), Asia's third- largest container terminal operator, reported a 13.1 percent decline in earnings in 2006 which it blamed on high startup costs at newly acquired terminals.
Those ports are expected to provide positive earnings in 2008 and 2009.
For the fiscal year ended December 31, the company's net profit fell to US$291.1 million (HK$2.27 billion) from US$334.9 million the previous year.
Revenues dropped 14 percent to US$253 million as a result of the disposal of 600,082 container boxes last June.
As well as terminal operations, other activities of the firm - the Hong Kong- listed unit of the mainland's largest shipping enterprise, COSCO Group - include container leasing, along with handling and storage business.
The company declared a final dividend of 4.147 US cents per share, raising the full-year dividend to 8.847 US cents a share.
For 2006, COSCO Pacific's ports division handled 32.7 million 20-foot equivalent units, up 25.7 percent from the previous year, contributing US$90.5 million worth of net profit.
However, its joint venture with Hongkong International Terminals saw container handling volume drop by 8.3 percent to 1.7 million TEUs, while net profit contribution fell 15.1 percent to US$23.75 million.
COSCO Pacific noted that its Antwerp terminal in Belgium remains in a negative financial position since operations began last year, but it is expected to turn a profit next year.
"Some of COSCO Pacific's port projects have been deemed to be finalized and are expected to become operational in 2007 and 2008, including Euromax Terminal in Rotterdam and Suez Canal Container Terminal in Egypt," wrote Bank of China analyst Jimmy Lam in a research report.
"These will enrich the coverage of the company's port portfolio and will be positive for its future earnings growth."
COSCO Pacific plans to invest US$777 million for capital expenditures in 2007, of which US$350 million will be used for terminal acquisitions. It is aiming to acquire 20 berths each year until 2010.
"We hope to diversify our terminals from container terminals to dry bulk terminals," said vice chairman and managing director Xu Min-jie.
COSCO shares closed Thursday at HK$19.20, rising 2.9 percent.