Business / Corporate Reports

Cosco 2013 annual report

By ZHONG NAN ( Updated: 2014-03-28 19:22

China Ocean Shipping (Group) Co, the country's largest maritime transportation company, swung back to the black in 2013, helped by port business, asset sales and China's surging demand for more foreign goods and commodities.

Cosco's revenue amounted to 62 billion yuan ($9.97 billion) in 2013, down 14 percent on a year-on-year basis, according to statement released on Thursday. However, its net profit totaled 235 million yuan. The company suffered a net loss of 9.56 billion yuan in 2012.

Ma Zehua, Cosco's chairman, said at a news briefing on Friday that the stable growth of port and container leasing business of Cosco Pacific Ltd and Cosco Container Lines Co, and China's fast trade growth from African and South American market boosted the company's profits.

"We will continue to adjust our market strategy in 2014, such as deploying more energy-efficient container ships into the market, enhancing the corporation with other members of the CKYHE Alliance, as well as cutting the number of aged vessels, management expenditures and fuel costs," Ma said.

CKYHE Alliance — consisting of Cosco Container Lines, K Line, Yang Ming, Hanjin Shipping and Evergreen — was formed in February to confront the competition from other shipping alliances such as the P3 Network and G6 formed by other foreign companies.

The rising net profit saved Cosco from being delisted from the Shanghai Stock Exchange this year after it posted losses for two consecutive years.

The company submitted an application to withdraw the delisting risk warning of its stocks for special treatment from the SSE on Friday. The SSE will respond to the company within five trading days after it receives the application. According to the rule, Cosco's stock trade will be suspended on the same day when company hands over its application.

To return to profit, the Chinese shipping conglomerate sold off its logistics business, stakes in a container manufacturer and office properties in Qingdao and Shanghai last year. It also further stepped up its financial and resource support to routes from China to Africa, South America and Southeast Asia in an effort to reduce unexpected risks caused by flagging markets in Europe and the United States.

"The Chinese government's current market focus on becoming an increasingly consumption-driven economy holds great potential for the shipping industry," Ma said. "We are getting a sense that domestic demand for more gain, precious metals and other commodities from both developed and emerging markets have surged in recent years."

Attracted by China's red-hot e-commerce market and recent moves by foreign competitors to diversify their China business, Cosco also began to invest more to improve its online service platforms for both international shipping and domestic logistics businesses.

Cosco Bulk Carrier Co, a subsidiary of Cosco, launched a new online sales platform last August, to offer packaged container and parcel services for domestic shipping services and will gradually expand this service on short-distance international shipping routes to the ports of South Korea and Japan.

"This upgraded e-commerce platform is a breakthrough attempt to expand our sales channels and enlarge the client group," said Jiang Lijun, Cosco's managing director, at the news briefing. "The new online media can also help us to introduce our diversified services within the industry and attract more potential customers."

However, not all big shipping companies had a good year in sales in 2013, China Shipping Container Lines Co and China Merchant Energy Shipping Co reported a net loss of 2.65 billion yuan and 2.18 billion yuan in March. Chang Jiang Shipping Group Phoenix Co, another large Chinese shipping company, is highly likely to be delisted from Shenzhen Stock Exchange this year, after suffering losses for three consecutive years.

COSCO and China Shipping (Group) Co signed a Strategic Cooperation Framework Agreement in February to establish a comprehensive strategic partnership and a resource sharing mechanism in the areas of shipping, terminal operation, logistics, shipbuilding and ship maintenance

The agreement will help the two companies achieve advantage complementation and coordinated growth, and be better prepared for industrial changes, so as to improve the influence of Chinese shipping companies in global shipping industry.

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