Orient Overseas (International) Limited (OOIL) said its container transport and logistics business reported EBIT of US$153 million for the first half of 2019, a reversal from a loss of $3 million in the same period last year, and representing an operating margin of about 4.6% from the previous contraction of 0.1%.
In a statement dated August 26, Hong Kong-listed OOIL said group revenue was $3.301 billion in the first half of this year compared to $3.115 billion in the first six months of 2018. EBITDA reached $418 million (excluding discontinued operation) as against $267 million in the same period last year. Operating profit was $198 million as opposed to $51 million in January-June 2018.
Profit attributable to equity holders was $139.0 million for the first half of 2019 compared to a loss of $10.3 million for the same period in 2018.
OOIL said that despite an economic environment filled with uncertainties, and with seemingly slowing growth in demand for container shipping services, OOIL’s financial outcome for the first half of 2019 “is a meaningful improvement from the same period last year, and represents a pattern of steady progress in results throughout the second half of 2018 that continued through the first half of 2019.”
OOIL’s shipping and logistics unit OOCL saw liftings increase by 3.2% in the first half of the year compared to last year, but revenue levels increased by 6.5%. “Market growth did indeed slow down in some trade lanes, but in many cases this slow down in volume growth was outpaced by an improvement in the freight rates,” said OOIL.
The rise in both the fuel oil and diesel oil price has resulted in the increase of bunker costs by 3% in the first half of 2019 compared with the corresponding period last year.
In the first half of the year, no new-build vessel was delivered, and no new order was placed by the group. “Currently, the six 21,413 TEU G-Class vessels delivered in 2017-2018 are among the largest containerships in our fleet,” OOIL said.
OOCL logistics revenue and contribution for the first half of 2019 decreased by 2.1% and 6.9%, respectively, compared with the same period last year. The contribution from international supply chain management service decreased by 2.9% due to downsizing of some major retail customers. Contribution from import/export services decreased by 4.5%. The contribution of depot business dropped by 21.5% due to tariff rate reduction. Lowering utilization of existing warehouses during the transition of replacing loss-making customers and large startup cost of new warehouses, as well as fierce price-cutting competition in transportation business, were all key activities contributing to the 16.0% drop in domestic logistics contribution.
Since implementing the “Dual Brand” strategy for achieving synergy benefits and improving service quality, OOIL said efforts to generate significant synergy savings through cooperation within the Cosco Shipping Holdings Co., Ltd. group have been bearing fruit. Cosco Shipping took over OOCL in July 2018.
“OOCL’s total liner liftings increased by 3.2% compared to the first half of 2018. Meanwhile, our unit cost (excluding bunker cost) has been on a downward trend as the result of synergies gradually achieved in cost saving,” OOIL said.
Photo: Brian Stansberry
