Orient Overseas (International) Ltd., the Hong Kong-based parent of Orient Overseas Container Line, on Friday reported profit for the first half of 2007 of US$2.22 billion compared with $280.5 million in restated profits it earned in the first half of 2006.
The results included a profit of $1.99 billion on the sale of the group's former terminals division to the Ontario Teachers' Pension Plan Board, and a $25-million revaluation of real estate investment property.
Excluding these one-time items, pre-tax profit was $229 million, an increase of 12.3 percent from $204 million during the first half of 2006.
"Overall, the markets have remained strong in terms of container volume growth and resilient in terms of freight rates which in some trades, certainly during the second quarter of 2007, have begun to show signs of a return towards former levels," said OOIL Chairman C. C. Tung.
Total container volumes for OOCL increased by 18.8 percent in the first half from a year ago. Increases on Asia-Europe, intra-Asia and Australasian routes were particularly strong. Total revenues, however, grew by 14.7 percent to $2.33 billion on a 3.4-percent decline in overall revenues per TEU.
The group said global consumer demand has thus far remained firm, with the economies of Europe strengthening and container volume growth "exceptionally strong" and showing "little, if any sign of slowing."
It said U.S. consumption and retail sales remain "remarkably resilient" despite various surveys suggesting a drop in consumer confidence.
The company said the first half of this year in terms of overall performance was similar to last year except that the relative performances of the various trades changed. "The significant difference was that whereas the environment of the first half of 2006 was one of softening freight rates the environment this year is one of strengthening freight rates," the earnings announcement said.
In the first half OOCL deployed the last two in an initial series of 12 new 8,063-TEU SX-class container ships; the second four of a series of eight 5,888-TEU S-class ships, and the first in a series of P-class Panamax vessels.
The deliveries boosted overall capacity by 20 percent on-year. OOIL said that despite increase in fleet capacity, volume growth has been so strong that its overall load factors registered only a slight 0.8-percent drop compared with the first half of 2006.
It said its emphasis on the deployment of tonnage in the stronger trade lanes has allowed load factors to remain at acceptable levels even on those trades experiencing more modest volume growth rates.