Just as the company predicted, Hong Kong and Shanghai-listed China Shipping Development Company (soon to be renamed Cosco Shipping Energy Transportation Co) more than doubled net profit for the interim period ending 30 June.
CSDC’s net profit finally came in at Rmb1.87bn ($279.95m), up 112.4% from Rmb880.29m.
The company clearly drew the long straw in the great Cosco restructuring when it disposed of China Cosco Bulk Shipping, a move that contributed Rmb760.5m to the greatly improved bottom line. CSDC’s entry into energy transportation through its acquisition of Dalian Ocean Shipping Company from China Cosco Group also helped boost the results to the tune of Rmb660.38m.
But the company’s outlook in a statement to the Hong Kong Stock Exchange inferred results might not be as bright by the end of the second half of 2016.
“At present, the global economic conditions remain challenging and complicated, and are facing many uncertainty factors. The China economy is in a critical period of deepening reforms and structural adjustments, downside pressure on the economy is relatively high, and L-shape economic growth will become a normal condition. Meanwhile, there is little sign of a reduction in the global supply of shipping capacity, and weak growth in demand are also affecting the shipping industry, the overall condition of shipping remains challenging,” the company said.
With respect to oil transportation, international crude oil prices are hovering at low levels which have brought immense pressure to petrochemical enterprises and will gradually be transmitted to the shipping industry. Meanwhile, the international oil shipment market is still suffering a downturn and is experiencing volatile fluctuations. Viewed from the point of view of the industry cycle, the third quarter is the traditional low season, but new shipping capacity will be delivered gradually in the third and fourth quarters of this year, which will exert downward pressure on freight rates,” CSDC concluded.
The CSDC interim results will be seen as one of the better outcomes following the restructuring, comparing favourably with China Cosco Holdings’ massive Rmb7.2bn loss for the first half of the year, which was revealed earlier this week.