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CSCL declares falling profits

CSCL declares falling profits

Shanghai: China Shipping Container Line has announced a massive 64.7% decrease in its operating profits to RMB 1,670,031,000 ($216m) for the year ending December 2006. CSCL chairman Li Shaode (pictured) said, "The Group has achieved remarkable growth in its results as compared with the first half of the year by capturing business opportunities created by market recovery, making internal structural adjustments, carrying out meticulous management and transforming sales strategies. However, the results were still lower as compared with the results for 2004 and 2005 when the shipping industry peaked."

Share holders in the company were particularly affected by the reduced profits as the 76% decrease in profit attributable to equity
Holders meant a final dividend of just RMB0.04 ($0.005) per share.

Although CSCL announced a 7.5% increase to turnovers, factors such as rising fuel price and falling average freight rate - particularly in the first half of 2006, were identified as primary causes of the reduced profits. In a statement to the press, the company said, "market anxiety regarding additional shipping capacity resulted in intensified competition, generally lower freight rates of trade lanes (especially the European/ Mediterranean trade lanes), the continuous rise in fuel price and the increase in operation costs of feeder and inland transportation. These, amongst other factors, caused the Group's profit for 2006 to be depressed."

China Shipping retains a cautious outlook for 2007 - despite the fact that it marks the group's 10th anniversary- due to the predicted drop in freight rates when new tonnage (currently on order) swamps the container market. The group has also identified "numerous uncertain factors such as fuel and steel price trends, the American economy and regional trade friction."

The Group has announced a structured plan to maintain profits which would include focusing on capitalisation of lucrative regional trade lanes abroad, maintaining revenues from domestic routes, increasing co-operation both in the maritime and railway sectors to improve logistical reach and optimising the structure its fleet - which is expected to reach 450,000 teu by end 2007 and will largely consist of vessels over the 4,000 teu mark.  [11/04/07]

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