Orient Overseas H1 loss first in 10 years

Updated: 2009-08-08 07:46

(HK Edition)

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HONG KONG: Orient Overseas (International) Ltd, Hong Kong's biggest container line, ranked 9th globally (by TEU cargo volume) in 2008, posted its first loss in 10 years as slumping world trade and rising overcapacity pummel cargo rates.

The $231.8 million first-half net loss compared with a profit of $158.3 million a year earlier, the company said in a Hong Kong stock exchange statement today. Sales plunged 35 percent to $2.07 billion.

The shipping line tumbled the most in almost three months - excluding a July 16 plunge that may have been a trading error - after Chairman Tung Chee Chen said the outlook would be "challenging" into next year. First-half container volumes fell 17 percent as European and US consumers cut spending on Asian-made toys and furniture because of the recession.

"Even if the economy starts slowly recovering, overcapacity is still a concern," said Geoffrey Cheng, a shipping analyst at Daiwa Institute of Research. Orient Overseas "is going to post a full-year loss."

Orient Overseas fell 7.64 percent, or HK$3.45, closing at HK$41.7 Friday.

Many shipping lines have expanded fleets this year as they take delivery of vessels ordered during a trade boom that ended last year. The growth in global capacity and falling demand has led to losses at the operators of Asia's four biggest container lines - Evergreen Marine Corp, Neptune Orient Lines Ltd, China COSCO Holdings and China Shipping Container Lines Co.

Orient Overseas' average revenue per container tumbled 14 percent in the first half from a year earlier. On transpacific routes, volumes fell 15 percent, while revenue declined 28 percent. On Asia-Europe routes, sales tumbled 59 percent, outpacing an 18 percent slump in volumes. The company's average container rate on Asia-Europe routes was 50 percent lower than a year earlier.

The container line pared capacity 14 percent by returning 13 vessels during the first half to reduce costs amid the slump, Chief Financial Officer Ken Cambie told reporters Friday in Hong Kong.

China Daily - Bloomberg News

(HK Edition 08/08/2009 page5)