Cosco Corp

Cosco Corp

Shipping group Cosco Corp said its second quarter net profit declined 53 per cent to S$31.9 million year-on-year, while group revenue rose three per cent to S$996 million from S$962.5 million a year earlier.

Cosco said the decline in profit was due to lower contributions from dry bulk shipping and shipyard operations as dry bulk charter rates slumped from the more favourable charter rates in the same quarter last year.

The Baltic Dry Index (BDI), a measure of shipping costs for commodities, slumped 58.3 per cent to an average of 1,379 points in 2Q 2011 from the corresponding quarter average BDI in 2010.

As of 30 June, the group's orders book stood at US$7 billion, with deliveries up to the first half of 2014.

Cosco said it is still maintaining a cautious outlook for 2011 as the global economy remains fragile over the sovereign-debt crisis in Europe.

It is also concerned that its operating margins in its shipyard operation may be compromised by factors including a stronger yuan, higher Chinese interest rates, steel price hikes and possible wage rises in China.

But it added that on an upbeat note, it is seeing a greater demand for oil rigs and other specialised support vessels with the higher price of oil driving the offshore & marine industry into an up cycle.

Cosco said that it intends to optimise on the up cycle while continuing to leverage on the strength of its diversified business to remain competitive in its strategic market position.