Financial and Operational Highlights – Full Year 2020

• Container Transport and Logistics business reported EBIT of US$1,005 million, representing an EBIT margin of approximately 12.3%.
• Liner liftings grew to 7.5 million TEU.
• Ordered twelve 23,000 TEU new vessels for delivery in 2023 and 2024.

 

*     Including Long Beach Container Terminal operation for 2019

Balance Sheet Highlights

• Group financial position remains one of the most robust in the industry
• Net cash of US$253 million as at 31st December 2020
• Liquid assets of US$3.3 billion as at 31st December 2020

^#      Liquid assets represent cash and bank balances, restricted bank balances, portfolio investments at fair value through profit or loss and investments at amortised cost. Net cash represent total debt deducted by liquid assets.

Details

 

OOIL Financial Results – Full Year and Second Half of 2020

*     Including Long Beach Container Terminal operation for 2019

Orient Overseas (International) Limited (“OOIL”) today announced a profit from operations of US$903.0 million for 2020, compared to a profit of US$195.2 million in 2019.  Profit attributable to equity holders for 2020 was US$902.7 million (2019: US$1,348.8 million, including profit on disposal of Long Beach Container Terminal of US$1,153.6 million).

Earnings per ordinary share in 2020 was US144.3 cents, whereas earnings per ordinary share in 2019 was US215.5 cents.

The Board of Directors has recommended the payment of a final dividend of US50.26 cents per ordinary share and a special dividend of US86.6 cents per ordinary share for 2020.

In order to optimise the capital structure of the Company, enhance its investment value, and further improve shareholder returns, the Board of Directors recommends the revision of the Dividend Policy (1) so as to have a target annual dividend payout of 40% of the consolidated net profit attributed to the shareholders of the Company in the financial years 2021, 2022 and 2023, and (2) such that the Company’s targeted total annual dividend payment shall not be less than US$400 million in each of the aforesaid financial years, whether as interim and/or final dividends, subject to, inter alia, the financial performance, liquidity position, future plans and working capital requirements of the Company and the prevailing economic, financial, business and regulatory circumstances.#

Since June, the situation for container shipping has been improving.  Benefitting from effective epidemic prevention measures, China was among the first countries to re-activate production and re-open for business.  In economies such as the United States and Europe by a combination of measures, including the encouragement of working from home and governmental subsidies, consumer demand also began to improve.  In turn, demand for space on our various tradelanes increased dramatically, with efforts being made to put more capacity into service as quickly as possible, in order to meet the surprising levels of demand.

This relatively prompt restart, coupled with the beginning of a wave of unexpectedly strong demand that continued unabated throughout the year, led to more capacity being deployed on some routes in the Trans-Pacific Peak Season 2020 than during the same period in 2019.

Our teams had to manage not only sudden and severe swings in demand, but also tremendous operational challenges.  Lockdowns in different terminals and at different points in the supply chain created chokepoints at key hubs.  The industry faced additional difficulties with a shortage of workers due to social distancing measures.  As more and more services were introduced, congestion and equipment availability became more and more problematic.  All these elements went together to create operational delays, and a slowdown in the flow of the repositioning of container boxes, which then in turn created further obstacles.

We continued to benefit from increased co-operation and synergy within COSCO SHIPPING Holdings, which helped us to handle the challenges of the year in the most professional and efficient manner.  In this Dual Brand context, and despite the impact of the pandemic, we expanded our presence into new routes, servicing many emerging markets, not least Latin America, and building up our global coverage further.

We placed orders for twelve 23,000 TEU vessels during 2020, which are scheduled to be delivered during 2023-2024.  Not only will these modern, efficient vessels improve our cost structure and our services in the Asia-Europe trade, but they also serve as clear evidence of the entire group’s continuing commitment to our very successful dual brand strategy.

For many years now, we have commented on the benefits of alliance membership.  Our situation within the Ocean Alliance continues to provide us significant advantage, and ensures that we are able to offer a broad, high-quality service network to our customers.  We have been members of the Ocean Alliance for four years, and look forward to attaining further benefit from our continued membership into a fifth year.

The challenges in effecting crew changes were rightly a key focus during 2020, and remain so.  Seafarers, through their efforts and sacrifices, have kept world trade flowing during 2020, and we all owe them a special debt of thanks.  We will exert every effort to ensure the safety and wellbeing of our seafarers, and this includes going the extra mile to help them return home at the end of each assignment.  We believe that we have been among the best performers in this regard, and, having signed the Neptune Declaration, we look forward to encouraging all parties to facilitate crew change, even during these challenging pandemic times.

Our logistics business, OOCL Logistics, in spite of COVID-related challenges earlier in the year, had a fruitful 2020.  We strengthened our business in rail services between China and Europe, and our Air Freight Forwarding.  Our warehousing and distribution activities increased, and we added new depot and warehousing capacity in Thailand and Vietnam.  We believe that co-operation between our logistics business and our liner activities will help to drive our groupwide strategic growth plan for end-to-end services.

Our group continues to advance its longstanding track record as a leader in technology and digital innovation.  We launched our Freightsmart platform, which will provide instant quotation and booking.  We inaugurated IQAX, a wholly-owned subsidiary, which will play a leading role in driving the digital transformation of the container shipping industry.  In the early part of the year our Business Continuity Infrastructure was put to the test, as thousands of employees suddenly had to work from home due to COVID-19 lockdowns – thanks to the solid efforts of all colleagues, we passed this test with flying colours, and maintained business operations and high quality customer service.

Looking ahead, despite current strong markets, we must recognise that the full impact of COVID-19 may not be known for some time.  By this, we mean not only the inevitable fluctuations of the freight rate markets and of the balance between shipping supply and global demand, but also that it remains to be seen how supply chains will evolve after the challenges of 2020.  We seek to serve our customers with ever greater end-to-end services and improved digitalised interfaces.  However, it also creates challenges and risks, which we will address intelligently and proactively.   

Whatever happens, OOIL will adapt and be ready to serve its customers.  We will continue to work tirelessly and diligently to be at the forefront of our industry, in technology, in environmental and social responsibility, in customer service, and in profitability and financial health.  As part of the COSCO SHIPPING Group, a true global leader in container shipping and logistics, we have confidence that, under our Dual Brand strategy, we are well placed to drive forward the success of our industry, as a Vital Link to World Trade.

As at 31st December 2020, the Group had total liquid assets of US$3,323.0 million compared with debt obligations of US$580.4 million repayable in 2021.  The Group changed from a net debt to equity ratio of 0.23 : 1 as at end of 2019 to a net cash position at the end of 2020.  The Group from time to time prepares and updates cashflow forecasts for asset acquisitions, to serve project development requirements, as well as working capital needs, from time to time with the objective of maintaining a proper balance between a conservative liquidity level and an effective investment of surplus funds.

OOIL owns one of the world’s largest international integrated container transport businesses which trades under the name “OOCL”.  With more than 420 offices in over 90 countries/regions, the Group is one of Hong Kong’s most international businesses.  OOIL is listed on The Stock Exchange of Hong Kong Limited.

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Issued by :        Orient Overseas (International) Limited

For further information contact

Martin Kan                 Investor Relations                   (852) 2833 3143

Internet address:         http://www.ooilgroup.com