Orient Overseas (International) Ltd., the parent of container line OOCL, reported a loss Friday of $400.6 million for the 2009 calendar year, compared to the profit of $275.5 million recorded in 2008.
The Hong Kong-listed group’s full-year revenue dropped 33 percent to $4.35 billion from $6.53 billion in 2008 although revenue increased by 11 percent in the second half of 2009 compared to the first half.
“2009 presented the worst market conditions ever experienced in the container shipping industry,” said OOIL Chairman C. C. Tung in announcing the Group’s 2009 financial results.
He said the year opened with a collapse in container freight rates as excess shipping capacity chased a dearth of demand volume. An improvement in freight rates occurred in various trade lanes over the second half of the year as capacity in excess of demand was removed and the first tentative signs of a pick-up in global economic activity were seen.
Second-half revenue from container shipping of $2.3 billion was 3.2 percent higher than the $3.3 billion in revenue in the same period of 2008.
Container volume declined 14 percent for the year as a whole to 4.2 million 20-foot equivalent units from 4.8 million TEUs in 2008. Second-half volume dropped by a slightly better 11 percent to 2.16 million TEUs from 2.42 million TEUs in the year-earlier period.
Full-year 2009 revenue per TEU dropped by 25 percent to $924 from $1,227 in 2008.
“Unfortunately, the second half of the year also saw increases in energy prices,” said Tung.
OOCL suffered a double-digit decline in volume in the first three quarters, and stabilized to a 4 percent drop in the last quarter. Overall, 2009 volume was 14 percent lower than in 2008 and revenue was 33 percent lower.
“The recovery in the global economy and the pick-up in OECD consumer demand are likely to be sluggish,” Tung said. “On the supply side, there continues to be an excess of capacity in the form of outstanding new-build orders and laid-up vessels that will need to be absorbed over the next three to four years. An imprudent re-introduction of capacity currently idling or laid-up, if mismatched to demand, could see fresh rounds of rate cutting.”
Tung said the industry’s challenge between short-term cash flow and longer-term stability will test the market’s capacity discipline over the next couple of years until trade growth eventually absorbs the surplus capacity.
OOIL sold Orient Overseas Developments on Jan. 18 to CapitaLand China Holdings for $2.2 billion. The sale was of the PRC property development business conducted under OODL and excluded the investments in Wall Street Plaza and Beijing Oriental Plaza. The sale and its associated profit will appear in the 2010 accounts.
“Our exit from the property development sector in China allows the Group to redeploy capital and to strategically reposition and focus the Group as a well-capitalized container transportation and logistics business,” Tung said.
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