China COSCO Holdings Co Ltd, the country's top shipping conglomerate, reversed losses to post a slightly better than expected net profit in the second half of 2010, Reuters reports.
But analysts say it is likely to face choppy waters ahead amid uncertain freight rates and rising costs.
The continued recovery of the global economy boosted earnings of China COSCO, which operates the world's largest bulk cargo fleet and is the fifth-largest container shipping firm, and lifted profit at top world operator A.P. Moller-Maersk to a record in 2010.
But strong earnings for the shipping industry, which is notorious for its cyclical volatility, are unlikely to be repeated this year due to declining freight rates because of increasing supply and rising costs, analysts said.
"The container shipping market is expected to maintain its equilibrium due to the increase of cargo volume and reasonable management of delivery of carriers," it said in a filing to the Hong Kong stock exchange.
But dry bulk shipping capacity was expected to rise by about 14 percent this year, higher than an estimated 6 percent growth in global shipping volume of major dry bulk cargoes, which may affect dry bulk shipping rates, it added.
The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, has struggled to recover after touching its lowest since 2008 in February. The March 11 earthquake and tsunami in Japan, a major importer of dry bulk commodities including iron ore and coal, have also hit freight activity.
China COSCO reported a net profit of 3.41 billion yuan ($519.4 million) from July to December, based on Reuters calculation using full year data, slightly higher than a consensus forecast of 3.24 billion yuan from 20 analysts polled by Thomson Reuters I/B/E/S.
China COSCO reversed a loss of 2.87 billion yuan in the second half of 2009.
For full year in 2010, the carrier earned 6.86 billion yuan versus its worse-ever loss of 7.47 billion yuan in 2009 as the financial crisis took its tollon international trade.
But analysts say it is likely to face choppy waters ahead amid uncertain freight rates and rising costs.
The continued recovery of the global economy boosted earnings of China COSCO, which operates the world's largest bulk cargo fleet and is the fifth-largest container shipping firm, and lifted profit at top world operator A.P. Moller-Maersk to a record in 2010.
But strong earnings for the shipping industry, which is notorious for its cyclical volatility, are unlikely to be repeated this year due to declining freight rates because of increasing supply and rising costs, analysts said.
"The container shipping market is expected to maintain its equilibrium due to the increase of cargo volume and reasonable management of delivery of carriers," it said in a filing to the Hong Kong stock exchange.
But dry bulk shipping capacity was expected to rise by about 14 percent this year, higher than an estimated 6 percent growth in global shipping volume of major dry bulk cargoes, which may affect dry bulk shipping rates, it added.
The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, has struggled to recover after touching its lowest since 2008 in February. The March 11 earthquake and tsunami in Japan, a major importer of dry bulk commodities including iron ore and coal, have also hit freight activity.
China COSCO reported a net profit of 3.41 billion yuan ($519.4 million) from July to December, based on Reuters calculation using full year data, slightly higher than a consensus forecast of 3.24 billion yuan from 20 analysts polled by Thomson Reuters I/B/E/S.
China COSCO reversed a loss of 2.87 billion yuan in the second half of 2009.
For full year in 2010, the carrier earned 6.86 billion yuan versus its worse-ever loss of 7.47 billion yuan in 2009 as the financial crisis took its tollon international trade.