A Cosco container is moved at the Kwai Chung shipping terminal west of Kowloon, Hong Kong, Cosco Pacific Ltd announced Tuesday its first-half net profit soared 82 percent year-on-year. Jerome Favre / Bloomberg News

Revenue climbs 40% to $222.7 million on global trade recovery

Cosco Pacific Ltd said it continues to look out for acquisitions, particularly in emerging markets, after posting 82 percent growth in first-half net profit on recovering global trade.

Asia's third-largest container-terminal operator said net profit for the six months ended June rose to $189.9 million, or $0.08 per share, from $104.5 million, or $0.047 per share, a year earlier, the blue-chip port operator said Tuesday.

Revenue rose 40 percent to $222.7 million from $159.0 million as trading activities recovered globally from the slump last year following the global financial tsunami in 2008.

Net profit was also boosted by a one-off gain of $84.7 million from selling a 49 percent stake in Cosco Logistics Co to its parent, said Cosco Pacific, which owns stakes in 27 container terminals on the mainland and in Hong Kong, Singapore, Belgium, Egypt, and Greece. The company recommended a special cash dividend of HK$0.111 following the disposal and declared a first-half dividend of HK$0.137, down from HK$0.144 in the same period last year.

"Global trade recovery showed strong momentum in the first half of 2010 on the back of the economic stimulus measures when our business has almost returned to the peak in 2008 before the financial crisis took place," said Xu Minjie, vice chairman of Cosco Pacific in a media briefing Tuesday.

"Even though the breakout of the European debt crisis in April curbed the global economic recovery, exports to Europe and the US did not post any significant slide, which remained strong during April and June as demand for Asian goods continued to revive," Xu added.

He does not expect a major slowdown in the container-shipping demand in the fourth quarter, even though it is traditionally an off season.

Port handling charges are likely to rebound with increased container demand in the second half, according to Xu, which leaves room for the company to lift tariff rates to the peak levels seen in 2008.

"And it could be a good time for the company to look for some expansion opportunities, especially in emerging markets," said Xu. But he believes acquisitions nowadays could be very costly as their peers may also plan for expansion in such a thriving market.

The company last year acquired some operations in Greece's Piraeus port, which "contributed significantly to the growth in revenue but affected the group's gross profit in the first half because of the high operation cost in the initial period of operation," said Xu. The Piraeus terminal recorded over $10 million in losses during the period.

Since Cosco Pacific fully took over the port on June 1 and the company could start hiring its own employees losses have started to narrow down, Xu said. He expects the port to start recording a profit earlier next year.

"Basic expenditure in the first half amounted $690 million and is likely to reach $1.15 billion throughout the year, against the $460 million whole-year expense in 2009," Cosco Pacific's financial controller Eddie Lui said.

China Daily

(HK Edition 08/25/2010 page3)