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Writebacks help Cosco Pacific to 30% rise in 2015 profit to $382m

Writebacks help Cosco Pacific to 30% rise in 2015 profit to $382m
Major Chinese port operator Cosco Pacific saw 2015 full-year net profit rise by 30% to $381.6m on the back of a writeback of provisions on the disposal of its stake in China International Marine Containers. Without the extraordinary gain however, profit was almost flat, rising just 3% to $302.5m from $292.8m in 2014, it said in a stock market announcement.

Revenue fell 8% to $798.2m from $870.1m previously. At a segmental level, Cosco Pacific's main terminals business saw revenue fall 6% to $486.8m mainly due to the depreciation of the Euro and Renminbi against the US dollar. 

This was unfortunate as its European terminals such as Piraeus Container Terminal were among its better performing assets, recording a stable operational performance.  While revenue in Euro increased by 4%, after conversion, the $156.1m equivalent represented a decrease of 12.5% from the 2014 figure of $178.5m.

Revenue from the container leasing, management and sale segment fell 12% to $315.7m from $357.1m previously. Revenue from the sale of returned containers was especially hard hit, falling 62% due to the significant 55.3% decrease in the number of disposed containers and the 15.2% fall in the average resale prices of returned containers compared with the previous year. Lease rates also continued to be affected by the sluggish container leasing market, and revenue from container leasing dropped by 3.5%.

There were some bright spots however. Better operational performances at Piraeus Terminal and Xiamen Ocean Gate Container Terminal helped balance the 6% drop in overall revenue from the terminals business and helped cut the fall in gross profit from the terminals business to only 0.1%.

Profit from the container leasing, management and sale businesses dropped by 13.5% to $82.8m from $95.8m previously as competition in the container leasing market remained fierce and lease rates fell.

Although the container fleet size increased by 1.9% to 1.9m teu the average utilisation rate of the group's boxes fell by 0.3 percentage points to 95.0% from 95.3% in 2014, and exacerbated the decline in profits for the container leasing business. As a result of the decrease in revenue from the sale of returned containers, gross profit from the sale of returned containers also decreased.

The terminals business also saw slow growth in container throughput and profit due to a slowdown in global economic growth and negative growth of imports and exports in China.

Total throughput increased by 2.0% to 68.7m teu from 67.3m teu in 2014.  Equity throughput increased by 1.1% to 19.3m teu Given the tough conditions profit rose by a reasonable 6% to $233.7m from $221m previously.