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CSDC profit soars on gains from assets restructuring

CSDC profit soars on gains from assets restructuring
China Shipping Development Company (CSDC) saw its first half profit increased two-fold over the year-ago period, thanks to a hefty gain from assets restructuring.

Net profit for the first six months ended 30 June 2016 was recorded at RMB1.87bn ($279.95m), jumping 112.4% from RMB880.29m in the same period of 2015, in line with the company’s expectations.

CSDC benefited from a gain of RMB760.5m from discontinued operation for its dry bulk shipment segment, transfering the business to China Cosco Bulk Shipping (Group) Co as part of an asset restructuring.

At the same time, CSDC also gained RMB660.38m from taking on 100% equity interest in Dalian Ocean Shipping Company from China Cosco Group.

The assets restructuring followed the merger of China Shipping Group (CSG), parent of CSDC, and China Cosco Group to form Coscocs (China Cosco Shipping Corp).

The restructuring will also see CSDC change its name to Cosco Shipping Energy Transportation Co (CSET).

Hong Kong and Shanghai-listed CSDC posted a first half revenue of RMB5.31bn, stable from the year-ago revenue of RMB5.33bn.

As at 30 June 2016, CSDC owned 99 vessels of 14.06m dwt, comprising of 95 oil tankers and four LPG tankers. In terms of fleet development, the group had no newly constructed ships in operation during the first half.

The Chinese shipowner noted that international oil prices are presently hovering at low levels which have brought immense pressure to petrochemical enterprises and will gradually transmit to the shipping industry.

“International oil shipment market is still in the downturn corridor and has experienced volatile fluctuations. Viewing from the industry cycle, the third quarter is the traditional low season, but new shipping capacity will be delivered gradually in the third and fourth quarters of this year, which will exert pressure on the market freight rates,” CSDC commented.

“The economy of China is in the critical period of deepening reforms and structural adjustments, downside pressure on the economy is relatively high, and L-shape economic growth will become a normal condition.

“Meanwhile, global supply of shipping capacity has no sign of reduction, weak growth in demand and oversupply of production capacity are also affecting the shipping industry, the overall condition of shipping remains challenging.”