OOIL ends 2016 with a net loss of US$219m with low growth in

Time: 2017-03-14 13:52
HONG Kong-listed Orient Overseas (International) Ltd (OOIL), the parent of liner company OOCL, has posted a net loss of US$219 million for 2016 against a profit of $284 million seen in the previous 12 month financial period.
Weaker revenue from its Asian and European services pushed revenue down 11 per cent year on year from US$6 billion to $5.3 billion.
However, the shipping line managed to cut costs by 4.4 per cent from $5.3 billion in 2015 to $5 billion last year.
OOIL said revenue from its Asian trades was down 7.5 per cent year on year to $3.6 billion, while that of the European trades was down 27.7 per cent to $732.3 million.
"This past year has seen some of the most difficult markets in our industry's history," said OOIL chairman C C Tung.
"A combination of steady but low growth in most regions and an overhang of excess supply built up in recent years led to extremely challenging conditions in many trade lanes for most of 2016."As fuel prices rose in the second half of the year, industry performance was badly affected by freight rates that frequently sank below the levels seen in 2009," noted Mr Tung.
"The financial results reported by the industry as a whole give a clear indication of just how severe conditions became. A quarter-by-quarter or half-by-half analysis of industry results since the middle of 2015 paints a picture of strengthening headwinds," he said.
During 2016, OOCL's vessels carried a total of six million TEU, compared to 5.6 million TEU in the previous year. The load factor also increased from 82 per cent in 2015 to 85 per cent in 2016.
"For the full year 2016, OOCL's liftings were up 9.1 per cent, but with a drop in revenue of 9.9 per cent. This reflects the challenging environment described above, as does the disappointing financial outcome for the year," Mr Tung remarked.
Looking ahead, the chairman said the slow-down in growth seen in several of the larger Asian economies has not caused any hard landings, Trade Winds reported.
"We draw some reassurance from the growth in ASEAN volumes as well as the improving dynamics of certain trades, such as the Australian trade," he said.
"Beyond this, if the East-West trades do indeed continue to pick up, we should see a beneficial effect on Intra-Asian volumes.
While not dismissing the significance of gradually improving data, we cannot afford to ignore the risk factors that could yet affect the outlook for the coming year.
"The global environment remains very uncertain. Protectionism, trade and geopolitical friction, and a slowdown in the growth of globalisation could all challenge the outlook for our industry.
"The industry supply and demand balance remains one of the largest risk factors. Expectations for net growth in 2017 suggest improvement in the situation, but time may be needed to absorb the existing supply overhang."
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