Orient Overseas (International) Line (OOIL), a provider of ocean carrier and logistics services, reported a turnaround in its midyear results as better managing ship capacity allowed it to boost freight rates.
OOIL, a subsidiary of COSCO Shipping Holdings (HKEX: 1919), reported a 6% increase in revenue for the first half of 2019, reaching $3.3 billion.
Net profit of $139 million for the period was improved from the $10.3 million loss the Hong Kong-based company reported in the year-earlier period. Earnings per ordinary share for the first half of 2019 were $0.22 per share versus the first-half 2018 loss of $0.016 cents.
Container shipping makes up the largest part of the results. Revenue from ocean transportation rose slightly better than overall results, reaching $3.02 billion for the first half of the year.
Orient Overseas Container Line (OOCL) saw its revenue growth accelerate in the second quarter to 7.1%, up from 5.9% in the first quarter.
Overall, OOCL's liner liftings increased by 3.2%, but revenue levels increased by 6.5%.
OOIL said the container shipping industry is becoming more nimble in terms of adjusting capacity "to the underlying condition of our ever-changing markets and more complicated global economic and trade situations."
OOIL's biggest market by revenue, the trans-Pacific, saw first-half volume drop 2% during the period. But OOIL grew revenue in the segment 5.8% to $1.18 billion.
The company said, "Market growth did indeed slow down in some trade lanes, but in many cases this slowdown in volume growth was outpaced by an improvement in the freight rate."
Its smallest market, the trans-Atlantic, also registered good growth amid ongoing tightness in that market.
OOIL saw first-half 2019 container liftings of 240,294 twenty-foot equivalent units (TEUs) on the trans-Atlantic, a 14.9% increase from the year-earlier period. Revenue on that trade lane during the period improved 20% to $294.8 million.
OOIL said the average cost of bunker recorded by OOCL in the first half of 2019 was $441 per ton, compared with $403 per ton for the corresponding period in 2018.
The company said the rise in both fuel oil and diesel oil prices has resulted in the increase of bunker costs by 3% in the first half of 2019 compared with the corresponding period last year.
OOCL Logistics revenue and contribution for the first half of 2019 decreased by 2.1% and 6.9%, respectively, compared with the same period last year.
It said its International Supply Chain Management Service revenue declined by 2.9% due to downsizing of some major retail customers. Import/Export Services decreased by 4.5%. Depot business dropped by 21.5% due to tariff rate reduction.
It said a lower utilization of existing warehouses and startup costs during the transition from loss-making customers to new customers also impacted results.
As for the future state of container ship supply in the industry, OOIL said it remained upbeat about medium- and long-term growth since the number of new container ships as a percentage of the total fleet "is at low levels not seen for more than a decade."
"Moreover, there are reports that scrapping of vessels has been greater this year than in the same period in 2018, a trend that may continue once IMO 2020 low-sulfur regulations come in and render older vessels less economic," it added.
Orient Overseas (International) Line (OOIL), a provider of ocean carrier and logistics services, reported a turnaround in its mid-year results as better management capacity allowed it to boost freight rates.
OOIL, a subsidiary of COSCO Shipping Holdings (HKEX: 1919), reported a 6 percent increase in revenue for the first half of 2019, reaching $3.3 billion.
Net profit of $139 million for the period was improved from the $10.3 million loss the Hong Kong-based company reported in the year earlier period. Earnings per ordinary share for the first half of 2019 was $0.22 per share versus the first-half 2018 loss of $0.016 cents.
Container shipping makes up the largest part of the results. Revenue from ocean transportation rose slightly better than overall results, reaching $3.02 billion for the first half of the year.
Orient Overseas Container Line (OOCL) saw its revenue growth accelerate in the second quarter to 7.1 percent, up from 5.9 percent in the first quarter.
Overall, OOCL's liner liftings increased by 3.2 percent, but revenue levels increased by 6.5 percent.
Market growth did indeed slow down in some trade lanes, but in many cases this slow down in volume growth was outpaced by an improvement in the freight rates.
OOIL said the container shipping industry is becoming more nimble in terms of adjusting capacity "to the underlying condition of our ever-changing markets and more complicated global economic and trade situations."
OOIL's biggest market by revenue, the trans-Pacific, saw first-half volume drop 2 percent during the period. But OOIL grew revenue in the segment 5.8 percent to $1.18 billion.
The company noted that "[m]arket growth did indeed slow down in some trade lanes, but in many cases this slow down in volume growth was outpaced by an improvement in the freight rate."
Its smallest market, the trans-Atlantic, also registered good growth amid ongoing tightness in that market.
OOIL saw first-half 2019 container liftings of 240,294 twenty-foot equivalent (TEUs) on the trans-Atlantic, a 14.9 percent increase from the year-earlier period. Revenue on that trade lane during the period improved 20 percent to $294.8 million.
OOIL said the average cost of bunker recorded by OOCL in the first half of 2019 was$441 per ton compared with$403 per ton for the corresponding period in 2018.
The company said the rise in both fuel oil and diesel oil prices has resulted in the increase of bunker costs by 3 percent in the first half of 2019 compared with the corresponding period last year.
OOCL Logistics revenue and contribution for the first half of 2019 decreased by 2.1 percent and 6.9 percent respectively compared with the same period last year.
It said its International Supply Chain Management Service decreased by 2.9 percent due to downsizing of some major retail customers. Contribution from Import/Export Services decreased by 4.5 percent. The contribution of depot business dropped by 21.5 percent due to tariff rate reduction.
It said a lower utilization of existing warehouses and start-up costs during the transition from loss-making customers to new customer also impacted results.
As for the future state of container ship supply in the industry, OOIL said it remained upbeat medium and long-term growth since the number of new container ships as a percentage of the total fleet "is at low levels not seen for more than a decade."
"Moreover, there are reports that scrapping of vessels has been greater this year than in the same period in 2018, a trend that may continue once IMO 2020 low-sulfur regulations come in and render older vessels less economic," it added.
At least the U.S. can make one trade deal
U.S. and Japan agree at G-7 Summit on trade deal covering $7 billion in goods. (Maritime Executive)
Cosco Shipping Ports takes dredging stake
World‘s largest ports operator in group bid for 40% stake of dredging company. (Splash 247)
DB Schenker goes digital
Freight forwarder‘s new online quote and book tools seen as way forward. (Shipping and Freight Resource)
Image Sourced from Pixabay
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
