China Cosco Seeks to Delay, Cancel Ships After Half-Year Loss

The company had a 3.97 billion yuan loss in its full-year accounts from forward freight agreements that fell in value because of the plunge in rates. FFAs are contracts used to bet on changes in shipping or chartering costs. Annual profit fell 40 percent to 11.6 billion yuan, missing the 16.2 billion yuan median of 10 analyst estimates compiled by Bloomberg.

This year, the China Cosco's dry-bulk traffic, or the total distance it carries paid-for cargo, will likely tumble to 846 billion ton-miles from 1.5 trillion ton-miles last year, according to the statement.

As of Dec. 31, the shipping line had secured 18 percent of 2009 dry-bulk operational days at rates a third lower than last year's average. The Baltic Dry Index, a measure of commodity- freight rates, fell 92 percent last year, the biggest drop in at least two decades. The company, controlled by China Ocean Shipping (Group) Co., had 443 dry-bulk vessels at the end of last year.

The shipping line slipped 7.6 percent to HK$6.34 in Hong Kong trading yesterday before the earnings announcement. The stock has climbed 18 percent this year, compared with a 3.4 percent gain for the city's benchmark Hang Seng index.

The company said its container-shipping arm may carry 5.2 million boxes this year, compared with 5.8 million last year. The shipping line will reduce capacity on major transpacific and Asia-Europe routes during slow seasons because of waning demand. As of Dec. 31, the company had a fleet of 141 container ships, with another 59 on order.

Sponsored Links