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Chinese Shipping Giant COSCO Sees Stronger 9-Month Profit
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Published Oct 10, 2022 07:28PM ET
© Reuters.
By Ambar Warrick
Investing.com-- COSCO SHIPPING Holdings Co Ltd (SS:601919), the listed arm of the eponymous shipping giant, on Tuesday forecast a stronger net profit for the past nine months thanks to higher sea freight rates.
The company expects net profit attributable to shareholders for the nine months to Sept. 30 at about 97.21 billion yuan ($13.59 billion), up 43.7% from the same period last year. Earnings before interest and tax are expected to be around 143.59 billion yuan, a jump of nearly 50% from last year.
COSCO said in an announcement to the Hong Kong Stock Exchange that a tense relationship between supply and demand for international shipping kept export freight rates at high levels.
The company said it also resorted to cost-cutting measures amid headwinds from a local COVID-19 outbreak and broader geopolitical tensions stemming from the Russia-Ukraine war.
Chinese trading activity has remained somewhat steady this year despite sluggish local production and waning demand for exports and imports. But a substantial fall in China’s trade balance in August may herald future weakness for major shipping firms.
Growth in Chinese exports slowed to 7.1% in August from 18% in the prior month, while imports barely expanded during the month. This saw China’s trade balance slump to $79.39 billion in August, missing expectations as economic ructions across the globe dented demand for Chinese goods.
Data later this week is expected to shine more light on China’s international trade in September, and also serve as a benchmark for the economy, which is still reeling from the impact of COVID lockdowns earlier this year.
Shipping rates have also reflected a slowdown in trade. Despite enjoying a relatively strong first six months, as COVID-linked disruptions pushed up container bookings, Chinese shipping rates have fallen sharply in recent months, according to data from the Shanghai Shipping Exchange.
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