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Sharp turnaround for OOIL profits from first half of 2009

Sharp turnaround for OOIL profits from first half of 2009

Hong Kong: Orient Overseas (International) Limited has announced a 32% increase in turnover to $2.7bn for the six month period ended 30th June 2010, resulting in post tax profits of $287.3m. This represents an increase of $506.6m when compared to the loss of $219.3m for the same period the year before. "Following last year's extremely difficult trading conditions, 2010 started positively for the container transportation sector with an improved supply/demand balance and upward pressure on freight rates," stated OOIL Chairman C C Tung. "Despite the modest pace of the global economic recovery, we have seen rapid growth in demand over the first six months of the year."
In particular, the group saw strong results from its container subsidiary Orient Overseas Container Line (OOCL) that took delivery of four 8,063teu and five 4,578teu new-builds. OOCL saw total liftings for the first half of 2010 up 11.6% compared to the corresponding period last year.  Average freight revenue per TEU for the period was $1,133, an increase of 24.2% over the loss-making levels of 2009.

"The first quarter saw strong demand as inventory levels - particularly those of US retailers - were rebuilt following the rundown that occurred last year. Demand continued to be strong in the second quarter despite only moderate improvement in economic indicators and even with the sovereign debt concerns in Europe. It appears that retailers and other importers have been building inventory levels in anticipation of improved end-consumer demand in the run-up to the year-end shopping season," remarked  Tung.

OOIL group's profits were boosted by a further $1bn from the sale of the Group's former PRC property development business conducted under Orient Overseas Developments Ltd to CapitaLand China Holdings. The group thus declared a whopping 262% increase in total operating profits to $310m.

However, the group remains cautious about its end year results. OOIL stated, "The strong demand has assisted with the absorption of new-build capacity delivering in the first half of the year, and has helped increase and hold rates at levels that will see the industry return to profitability in 2010. Despite the positive first half environment, the likely strength of consumer demand in the second half of the year remains unclear and freight rates continue to be fragile with significant new-build capacity still to be absorbed before year-end."   [24/08/10]