Container shipping giant Cosco Shipping Holdings has flagged a 74% drop in profits in the first quarter of the year.
The Hong Kong and Shanghai-listed company expect net profit to drop to CNY 8.4bn ($1.2bn) for the first three months of the year.
That is nearly three-quarters down from CNY 32.5bn ($4.7bn) in the same period last year, the company said in a statement today.
The company blamed changes in demand and supply that had led to a 68.4% year-on-year decline in average freight rates as measured by the China Containerized Freight Index.
The profit expectation marks a turning point for Cosco Shipping Holdings, which has reaped billions of dollars from its dual container brands.
These are its wholly-owned Cosco Shipping Lines and Orient Overseas Container Line (OOCL), which the company controls through 71% stake in holding Orient Overseas International (OOIL).
Profits for the Chinese company, which is 41.94% owned by state-owned Cosco Shipping Group, rose 26% to CNY 131.4bn ($19.2bn) in 2022.
Group revenues last year rose 17% to CNY 391bn compared with the previous year.
The container operation of the listed Cosco divisions comprises a fleet of around 489 ships with a capacity of 2.89m teu.
Ebit down
However, in the first quarter of this year, the company expects earnings before interest and tax (ebit) of CNY10.5bn.
That is down from CNY 40.5bn in the same period last year.
Net profit attributable to shareholders in the reporting period is expected to be CNY 6.9bn, down from CNY 27.6bn.
In its results at the end of March, the company warned that “the external environment will become more complex and challenging”.
The company also highlighted long-term issues including the slowing down in demand growth.
Those issues have impacted on Cosco-subsidiary OOCL, which yesterday posted a set of first-quarter figures showing a clear decline in revenue and volumes.
The latest update by OOCL, which is listed in Hong Kong through parent OOIL, shows total revenue decreased 57.8% to $2.18bn year-on-year.
The biggest drop in revenue terms came on trades between Asia and Europe, which brought in $489m, down from $1.5bn in the first three months of 2022.
Transpacific revenue for OOCL was 65.6% lower at $650m, but transatlantic trade actually grew 4.7% to reach $312m, as liftings jumped 25.5% to 128,000 teu.
