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China Cosco hit by $1.08bn loss in first half

China Cosco hit by $1.08bn loss in first half
China Cosco Holdings has been hit by a first half loss of RMB7.21bn ($1.08bn) arising mainly from a RMB2.43bn loss on disposal of subsidiaries, as well as the overall weak container shipping market.

The loss in the six-month period ended 30 June 2016 compared to the profit of RMB1.97bn in the previous corresponding period.

“The loss… was mainly due to loss on disposal of Cosco Bulk and FCHL of RMB2.4bn,” China Cosco said. FCHL is in the container leasing, management and sales business. The company added it did not receive government subsidy on vessel demolition during the reporting period.

The disposal of the subsidiaries is part of a restructuring programme with China Cosco becoming the container shipping unit of the merged China Cosco Shipping Corp (Coscocs).

First half revenue, however, inched up to RMB29.63bn from RMB28.87bn in the year-ago period.

In the first half this year, China Cosco was also affected by extremely low freight rates in the container shipping market. The average income per teu from the company’s container shipping business recorded a year-on-year decrease of 23.9%, which exceeded the decrease in average container freight cost per teu.

“Despite the expected slowing growth of the capacity of global container fleet in the second half of 2016 and the pick-up of market demand with the traditional peak season in the third quarter, the overall oversupply of shipping capacity will continue to plague the container shipping industry, and the market situation will remain challenging,” the company commented.