China COSCO Holdings returned to profit in 2013 thanks to investment gains from asset disposals during a global shipping downturn, avoiding a possible delisting after losses in the two previous years.
If China’s largest bulk shipping company, which is controlled by state-owned China Ocean Shipping (Group) Company, had posted losses for a third year running, this could have triggered a delisting from the Shanghai stock exchange.
The firm eked out a slim net profit of 235.47 million yuan ($37.92 million) for the fiscal year ending December 2013, compared with a net loss of 9.56 billion yuan a year earlier, it said in a filing to the stock exchange on Thursday.
The net profit was far better than a market consensus forecast for a 2.7 billion yuan loss, according to Thomson Reuters I/B/E/S.
The shipping industry has been battling overcapacity since the financial crisis because new vessels ordered before the downturn have flooded the market.
In 2014, China COSCO faces uncertainties such as the strength of the global economic recovery and volatility of oil prices, the company said in the filing.
“Even though the global shipping sector is recovering gradually, oversupply still persists in the short-term,” it said in the earnings statement.
COSCO said in January it would have swung to the black in 2013, helped by cost controls and investment gains from asset sales. To return to profitability, the company has sold its logistics business, stakes in a container manufacturer and office properties last year.
But Ma Zehua, chairman of parent COSCO Group, told Reuters earlier this month he was not sure China COSCO could make a profit in 2014 given the uncertain outlook for the global economy. He also said “there aren’t that many ways left to tackle losses through asset disposal”. (Reuters)