COSCO SHIPPING Holdings Announces 2018 Annual Results
2019年03月29日 20时 COSCO SHIPPING
(29 March 2019, Shanghai) － COSCO SHIPPING Holdings Co., Ltd (“COSCO SHIPPING Holdings” or “the Company”) (SSE: 601919; HKEx: 1919) today announced its annual results for the twelve months ended 31 December 2018 (the “Period”).
In 2018, the global economy continued to recover, but the growth momentum slowed down. The negative factors, such as the concentrated vessel delivery in the first half of the year, significant rise of oil prices and escalating trade frictions, resulted in significant decrease in overall performance of the container shipping industry as compared to 2017.
During the reporting period, the Company took advantage of the positive factors arising from the acquisition of Orient Overseas (International) Limited (“OOIL”) to overcome the adverse market factors. COSCO SHIPPING Holdings recorded a net profit attributable to the equity holders of the Company of RMB1.23 billion and achieved a 6.1% EBIT margin. The results remained at relatively good level in the industry. Both of its two liner companies were profitable and achieved significant improvement in the second half of the year as compared to the first half. The results of the terminal segment achieved high growth if the one-off non-recurring items in 2017 were excluded.
The core businesses of the Company continued to maintain sound development momentum. In 2018, the container shipping business of the Company handled a shipping volume (based on the container volume as per bill of lading) of 21.79 million TEUs, representing a year-on-year increase of 29%; of which COSCO SHIPPING Lines handled a shipping volume of 18.37 million TEUs, representing a year-on-year increase of 8.7% and OOIL handled a shipping volume of 3.4 million TEUs from July to December. The container terminals of COSCO SHIPPING Ports recorded a total throughput of 120 million TEUs, representing a year-on-year increase of 21%.
Achieving a leap-forward development by acquiring OOIL
In July 2018, COSCO SHIPPING Holdings successfully acquired OOIL, achieving a leap-forward development in the size of its fleet. Its ranking in the industry edged up to the third in terms of shipping capacity and the Company became one of the world’s first-tier container shipping companies. As of the end of 2018, it operated a fleet comprising 477 container vessels with total shipping capacity of 2.76 million TEUs and had an order book of nearly 180,000 TEUs.
The acquisition effectively integrates the global network advantages of COSCO SHIPPING Lines and OOCL, which increases the synergies between the two parties, and provides customers with enriched product choices and better services.
OOCL has excellent management team, trusted brand and efficient management system. For the better development of such valuable intangible assets, COSCO SHIPPING Holdings formulated a “dual-brand” strategy, which can ensure the stable operation of OOCL and facilitate synergistic development of the “dual-brand” container shipping business.
COSCO SHIPPING Lines and OOCL cooperated closely with each other to explore and gradually achieve synergies in the areas such as fleet and shipping route network planning, procurement, container management, IT, commercial coordination and shipping operation. In the second half of 2018, both of these two liner companies recorded good operating results, enhancing the overall competitiveness of the Company’s container shipping business.
Completing the private placement of A shares to optimize the Company’s capital structure
In 2018, COSCO SHIPPING Holdings actively promoted the private placement of A shares. A number of strategic investors highly appreciated and supported the Company for the significant improvement of its international competitiveness since the reform and restructuring in 2016 as well as the clear development strategy. The issuance was successfully completed in January 2019 with proceeds of RMB7.7 billion being raised, which further optimized the Company’s capital structure and enhanced the Company’s capability in the sustainable development of core businesses.
Formulating Stock Option Incentive Plan and Strengthening Incentive Mechanism
In order to establish a more long-term and abundant incentive system within the company and fully mobilize the enthusiasm of middle and senior managers and core professionals, COSCO SHIPPING Holdings has formulated a stock option incentive plan in 2018 to grant stock options to no more than 475 targets. The Company believes that the implementation of equity option incentive plan, which deeply binds personal interests to the company's long-term development strategy, will further stimulate the initiative and creativity of the company's employees, and help to maximize the value of the enterprise and the return of shareholders.
Promoting the global layout of shipping routes and terminals, and improving the capability of end-to-end one-stop transportation services
Since March 2016, COSCO SHIPPING Lines has made great efforts to explore emerging markets and intra-regional markets along the Belt and Road. The percentage of shipping capacity deployed by the Company in emerging markets increased from 12% to 18% and that in intra-regional markets increased from 30% to 37%, making the layout of its shipping route network more balanced and global. Since the second half year of 2018, OOCL, a subsidiary of the Company, began to utilize the vessel slots of COSCO SHIPPING Lines in the shipping routes of Africa and South America services to explore emerging markets. COSCO SHIPPING Lines and OOCL cooperated closely, exerted synergies, explored market opportunities and fully committed to and actively implemented the Belt and Road Initiative.
Meanwhile, in light of its shipping route layout, COSCO SHIPPING Lines actively developed the sea-rail transportation business to facilitate the construction of the “Silk Road Economic Belt”. In 2018, the Company opened several new self-operating China-European container liner trains in cooperation with China Railway Corporation* (中國鐵路總公司). The Company provided services in a total of 112 foreign trade rail lines departing from China and 152 China domestic rail lines, covering 20,000 to-door-service points, which enabled its customers to have diversified choices and end-to-end transportation solutions. The Company continued to promote the construction of the China-European Sea-rail Express based in Piraeus Port in Greece. In 2018, the China-European Sea-rail Express recorded a freight volume of 50,000 TEUs, representing a year-on-year increase of 27%.
As for the port business, a majority of terminals controlled and invested by COSCO SHIPPING Ports were located along the Belt and Road with a total of 283 berths in operation, including 192 container berths with an annual handling capacity of 106 million TEUs. In December 2018, CSP Abu Dhabi Terminal, a terminal invested and developed by COSCO SHIPPING Ports was formally inaugurated and is planned to be a major container gateway port and important hub in Middle East. In January 2019, COSCO SHIPPING Ports announced the addition of two new berths at the COSCO-PSA Terminal in Singapore to strengthen its presence in Southeast Asia. In the same month, COSCO SHIPPING Ports signed a formal agreement to acquire 60% equity interest in Chancay Terminal in Peru, and the project is the Company’s first controlled terminal project in South America.
Promoting the development of digitalized shipping services to enhance service standards and customer experience
In November 2018, COSCO SHIPPING Lines, OOCL and several other world leading ocean carriers and terminal operators signed a letter of intent for the establishment of the Global Shipping Business Network (GSBN), an open digital platform in the shipping industry based on blockchain technology, with the aim to jointly promote the establishment and information sharing of digital standards and improve the operational efficiency and the quality of customer service of the industry. The software solutions of the shipping blockchain consortium which is the core technology application will be developed and provided by Cargo Smart, a subsidiary of OOIL.
Adhering to the customer-oriented philosophy, COSCO SHIPPING Lines promoted the application of digital technology. In the first half of 2018, the Company, together with JD.COM (京東) and Good-farmer (佳農), jointly initiated the project of tracing the origin of Ecuador’s bananas, enabling consumers to trace the origin of foods by scanning QR codes. It was the first commercial application of blockchain technology in the shipping industry, which enabled the Company to realize B2B2C services.
Improving brand image by actively fulfilling social responsibilities
COSCO SHIPPING Holdings has long been upholding the philosophy of sustainable development, thereby increasing its market awareness and intrinsic value through sustainable development and management. The Company has strived to enhance its operation and fulfill its social responsibilities, pursuing green shipping and building low-carbon ports in order to promote continuous improvement of its internal management and strive to become a respected and trustworthy multinational shipping enterprise.
In 2018, the Company continued to promote and use various advanced energy conservation and emission reduction technologies, and effectively reduced fuel oil consumption through management measures such as optimizing structure of its fleet and design of its shipping routes and improving operation efficiency of vessels at ports, thereby reducing the environmental impact and carbon emission of the business operations. In response to the new regulation on limiting sulphur emission to be implemented worldwide by International Maritime Organization (IMO) in 2020, the Company actively studied and compared various solutions, followed up the development trend of global low-sulphur fuel supply and strengthened communication with fuel suppliers to secure supply in order to make good preparations to meet IMO’s requirement in time.
Through continuous efforts of the Company in serving the development of global economy and trade and fulfilling social responsibilities, the brand image and market recognition of the Company have been further enhanced. In May 2018, both of the Company’s A shares and H shares were included in the MSCI China Index; in September, the Company’s H shares were selected as a constituent stock of the Hang Seng Corporate Sustainability Index Series; in October, the Company was included in the World’s Best Employers List 2018 by Forbes; in December, the Company was named the Best Listed Company for Practicing the Belt and Road Initiative (“一帶一路”最佳實踐上市公司) and was presented the Golden Bauhinia Award by Ta Kung Pao; in January 2019, the Company was included in the Top 50 Companies List in the inaugural “New Fortune Best Listed Companies (新財富最佳上市公司) Award”.
Looking ahead into 2019, both of challenges and opportunities are lying ahead for the global economy and the shipping environment. Challenges include a slowdown in the global economy, as reflected by the adjustment of the global economic growth forecast for 2019 from 3.7% downwards to 3.5% by the International Monetary Fund (IMF) in January. Various uncertainties may negatively affect shipping industry, including trade frictions, high oil price, and the industry’s supply-demand imbalance, especially the overcapacity problems in some markets. The favorable conditions and positive factors include the growth drivers of China economy remain stable and strong. The Belt and Road Initiative creates considerable opportunities for the development of the world economy, and with the construction of the Belt and Road being further deepened worldwide, and the capacity growth of container shipping tends to slow down, thus may help alleviate the pressure on supply side.
In the face of opportunities and challenges, the Company will follow the established strategy deployment to achieve higher quality and more sustainable development.
For the container shipping business, 2019 is a crucial year for the Company to transform from “scale development” to “operating in a more precisely way, returning to the essence of the shipping industry and improving service”. The Company will fully implement its core “Ocean & Plus” strategy, namely “globalization, dual-brand, digitalization and end-to-end”. In respect of ocean services, the Company will further promote globalization, improve the quality of shipping services and continuously reduce costs through the dual-brand strategy to achieve higher efficiency. Moreover, the Company will continue to improve customer experience through digitalization and end-to-end services.
COSCO SHIPPING Ports, the port business, will continue to have its development focus on the Belt and Road and emerging markets, actively establish an integrated port-oriented supply chain platform, strive to enhance the operation standards and profitability of controlled terminals and constantly improve development quality. The Company will continue to strengthen its global terminal network, leverage the synergies with parent company and OCEAN Alliance, enhance the management and efficiency of the terminal operations to achieve its five year target and become the world top-tier port operator.
"All rivers eventually flow into the sea in despite of different sources ". In the new year, as the most significant component of core businesses, listed platform of the container shipping service supply chain and listed flagship subsidiary of China COSCO SHIPPING Group, COSCO SHIPPING Holdings, together with parties from various fields, will continue to work proactively and diligently, constantly improve development quality, endeavor to build the Company as a world first-tier integrated container shipping service provider, provide customers with better services and create greater values for shareholders.
