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Cosco Pacific pushes out 12% H1 profit rise despite tough conditions

Cosco Pacific pushes out 12% H1 profit rise despite tough conditions
Major terminal operator Cosco Pacific reported a 12% rise in first half profit to $164.4m from $146.8m previously on good cost control and optimisation of management efficiency as s revenue dropped 8.6% to $402.4m from $440.2m previously.

The company said in an announcement that profit from the terminals business rose by 11% to $121.2m from $109.1m in the previous corresponding period. Equity throughput rose slightly by 1.9% to 9.5m teu from 9.3m teu previously. Total throughput meanwhile rose by 4% to 33.8m teu.

During the first half, robust growth in throughput and increased tariffs helped relatively recent addition Xiamen Ocean Gate Terminal to  turn around to a small profit. Together with Xiamen Haitou Tongda Terminal which was acquired in March 2013, the terminal reported a profit of $9,000 from a $2.9m loss previously. Meanwhile the group’s share of profit from other major terminals such as Yantian Terminal rose by 11% to $23.0m from $20.7m previously. Qingdao Qianwan Terminal saw an increase in its average revenue per teu and throughput, which drove the profit contribution to rise by 13% to $24.4m from $21.6m.

Profit from the container leasing, management and sale businesses however dropped by 7% to $49.7m from $53.3m previously as lease rates and rental yield remained at historically low levels, Cosco Pacific said. The container fleet size expanded 2% to 1.97m teu from 1.94m teu previously.

On future prospects, Cosco Pacific said: "Looking ahead to the second half of the year, in light of the volatile global economic conditions, stagnant economic recovery in the US and Europe, as well as the downward pressure on China’s economic growth, fierce competition is expected to continue within the sector. Such challenging operational environment is bound to have some impact on the group’s terminals and container leasing businesses, and the growth in container throughput of the group’s terminals in 2015 may turn out to be slower than expected."