In a recent financial report, COSCO SHIPPING announced a substantial decline in its quarterly net earnings, with a net profit of RMB 4.78 billion (USD 655 million) attributed to its container shipping activities. This figure represents a staggering 95% drop compared to the previous year’s performance, despite an increase in the volume of cargo transported, according to Alphaliner.
During the reported period, the Shanghai-based carrier successfully transported 6.1 million twenty-foot equivalent units (Mteu), maintaining consistency with the previous year’s statistics and showing a 2% increase compared to the preceding quarter. Nevertheless, the company’s revenue witnessed a noticeable decline, reaching RMB 40.9 billion, marking a significant departure from the beginning of the fiscal year.
This marks a noteworthy milestone as it is the first time in three years that COSCO’s quarterly net profits have fallen below the USD 1 billion mark, signifying a challenging financial period for China’s flagship carrier.
COSCO SHIPPING has managed to achieve cost reductions through stringent measures, recording a remarkable 37% reduction in operating expenses for the first nine months of the year. While specific details regarding these cost-cutting measures have not been disclosed, earlier indications suggest that the most substantial savings were made in equipment and cargo transportation, followed by voyage expenses.
Despite its previous market-beating operating margin of 27.0% in the second quarter, COSCO experienced a drop to a more modest 15.8% in the third quarter. The operating profits (EBIT) also exhibited a significant decrease, falling from RMB 11.5 billion in the previous quarter to RMB 6.5 billion in the latest financial report.
Source: Alphaliner, COSCO