Cosco Profits Boosted by Low Fuel Prices
China Cosco Holdings ended 2014 in profitable territory, growing its net earnings by 50 percent to $56 million on the back of cost cuts, improved revenue and lower bunker fuel prices.
The company, the flagship unit of state-owned shipping conglomerate China Ocean Shipping (Group) Corporation, in 2013 reported a net profit of 235.5 million Yuan ($37.7 million).
A company stock exchange filing said various measures had been taken to increase revenues and cut costs as the imbalance between supply and demand in the international shipping industry showed no substantial improvement in 2014.
Ma Zehua, chairman of the board of Cosco Group, said earlier that the group had achieved around $400 million savings in fuel bills last year compared to the previous year, and lowered its overall fleet age to 10.38 years from 14.2 years.
The group is now targeting an annual profit margin of between 4% to 5.5% by 2020.
In a separate statement, China Shipping Development Co Ltd, which mainly ships crude oil and commodities such as coal, said it would post a profit of about 300 million Yuan in 2014, after seeing a loss of 2.3 billion Yuan in the previous year.
In 2013, the Chinese government rolled out policies to encourage with subsidies Chinese ship-owners to scrap ageing China-flagged vessels. The subsidies double if the shipowners order new tonnage at Chinese shipyards to match the depleted tonnage.
