Cosco Pacific net profit up 81.7pc after sale of logistics unit

HONG KONG-based Cosco Pacific Limited, the terminal operating, container manufacturing and leasing unit of the Cosco Group, has declared a year-on-year first half net profit increase of 81.7 per cent to US$189.9 million.

But this did not include earnings from the company`s discontinued logistics business, Cosco Logistics, without which gross profit dropped 4.4 per cent to US$69,771,000. First half revenue, however, increased 40 per cent to $222.6 million.


"With regard to the logistics business, the group completed the disposal of its 49 per cent stake of Cosco Logistics, realising a profit (net of tax) of US$84,710,000 in the period," said the company statement to the Hong Kong stock exchange.


Cosco Pacific Logistics Company Limited (CP Logistics), a wholly owned subsidiary of the company, entered into an agreement with China Cosco Holdings Company Limited, after which CP Logistics agreed to sell and China Cosco agreed to buy the 49 per cent for CNY2 billion (US$292.9 million).


Last year, Cosco took over operations of the Piraeus Container Terminal SA as well as the operation of Pier 2 of the Piraeus Port in Greece, which contributed to first half group revenue growth, said the company statement.


But the unit incurred high cost in the start-up period and posted a loss during the first half, which hit company profits.


Another Piraeus Terminal problem is a law suit by consultant Aronis Drettas Karlaftis Consultant Engineers, against Cosco Pacific and the terminal, claiming EUR5.8 million (US$7 million) for unpaid design work. "Having taken legal advice, the company and Piraeus Terminal have good defences. The company will therefore contest the claims vigorously," said the statement to the stock exchange.


Container throughput at all Cosco Pacific terminals increased 18.7 per cent to 22,428,048 TEU in the first half over last year`s corresponding period.


The company`s container fleet size fell 0.5 per cent to 1,597,779 TEU over the same period of last year and the overall average utilisation rate rose 5.1 percentage points to 95.4 per cent.


"Driven by the economic recovery, Cosco Pacific showed a growth in its terminal and container leasing businesses in the first half. However, some of the terminals were still in their early phases of ramping up and resulting in initial losses," said the statement.


"Moreover, Yantian International Container Terminals Co Ltd did not declare its 2010 interim dividend during the period. Hence, profit generated from terminal business was affected," the statement said.


Container leasing and related businesses` profit increased 29.5 per cent to $47,993,000. As of June 30, the total container fleet of the group was 1,597,779 TEU, among which 773,328 TEU were owned containers, 118,094 TEU were sale and leaseback containers and 706,357 TEU were managed containers.


First half container manufacturing profit dropped 8.1 per cent year on year. That included profit from CIMC, as well as the profit of US$5.51 million from the disposal of the 20 per cent of Shanghai CIMC Reefer in the first half of 2009.