China Merchants Energy Shipping (CMES) is expecting moderate growth in full-year revenue this year, riding on healthy ro-ro and dry bulk shipping markets despite tanker weakness.
In a recent exchange filing, the Shanghai-listed company said it aimed for CNY 18.8bn ($2.91bn) revenues in 2021, up 4% from last year’s level.
The target was revealed as the diversified shipowner reported its first-quarter revenues fell 24.8% to CNY 3.6bn.
CMES reported net profit of CNY 382m between January and March, down from CNY 1.27bn during the first quarter of last year.
The company, part of state-backed China Merchants Group, attributed the weaker results to low tanker earnings.
“The international crude shipping market has slumped into a ‘deep’ downturn since the fourth quarter of 2020,” said the company, which owns more than 50 VLCCs. “Spot earnings for VLCCs were at their lowest in decades in the first quarter.”
The company’s tanker fleet recorded revenues of CNY 1bn in the first quarter, representing a CNY 1.8bn fall from the same period of 2020.
Super slow steaming
“The tanker business was still profitable for us because we locked in some period charters and contracts of affreightment in 2020 when the market was good. We also had super slow steaming,” added CMES, without disclosing detailed figures.
The company’s bulker business, which operates more than 140 vessels, including 34 VLOCs, saw first-quarter revenues rise by CNY 443m to CNY 2.06bn.
“While the first quarter is traditionally a low season for dry bulk, strong coal and grain shipping demand were boosting bulker rates this year,” CMES said.
“The market was overall better than expected, in particular driven by brilliant performances of mid and small-size ships.”
Revenues of its ro-ro fleet increased by CNY 156m to CNY 293m.
“Ro-ro demand was getting better amid a recovery in car production and sales in China,” the company said.
“There were many stimulus measures from the central and local governments for the automobile industry.”
Separately, CMES said it would dispose old vessels “when the timing is right”, without providing details.
Brokers recently reported the company sold the 297,300-dwt VLCC tanker New Creation (built 2009), one of the oldest tankers in its fleet, to Greek owner Thenamaris for $37.5m.
The 296,100-dwt New Talisman (built 2009) and 297,600-dwt New Coral (built 2010) had also been put up for sale last year, but no deal was concluded.
