- Liftings increased by 24.4%.
- Turnover increased by 31.2% to US$1,889 million.
- EBITDA of US$367.9 million (US$157.8 million last year).
- Profit attributable to shareholders of US$268.4 million (US$79.5 million last year).
- Earnings per share of US48.4 cents (US14 cents last year).
- Interim dividend of US12 cents (HK94 cents) per ordinary share.
- Delivery taken of four 8,063 TEU new vessels.
- Improved recurrent results from terminal operations.
- Property development projects progressed as forecast.
Orient Overseas (International) Limited (“OOIL”) Group today announced a profit before taxation of US$283.3 million compared with US$88.7 million for the same period last year. After taxation and minority interests, the Group reported a profit of US$268.4 million, an increase of US$188.9 million from the US$79.5 million earned during the first half of 2003.
OOIL Chairman and Chief Executive Officer, Mr. C C Tung, said “This substantial further improvement in overall performance has been due almost entirely to the continued strong performance of the Group’s core international container transport business. This in turn, has been the result of both the continuing strength in the growth of container volumes and a solid level of freight rates resulting from the sustained favourable balance between the rates of growth of container volumes carried and the introduction of new tonnage into service”.
“The combination of the processes of containerisation, globalisation and outsourcing of production and assembly together with strengthening global economic growth has resulted in container volumes increasing at unprecedented rates and in excess of the rate at which new tonnage has been deployed. Compared with the corresponding period last year, liftings increased by 17.2% on our Trans-Pacific services, by 35.5% on our Asia to Europe services and by 12.9% on our Transatlantic services. For our Intra-Asia and Australasia services the increase was 29.2%. In the pursuit of improved operational efficiency, the continued tight control over costs together with the ongoing investment in IT capabilities have also resulted in benefits. Business and administration costs have continued to fall as a percentage of revenues as they have on a per TEU basis,” added Mr. Tung.
“During the first half of 2004 our terminal operations have again enjoyed mixed fortunes although all have derived benefits from the continuing general increase in the number of container movements. Global Terminal in New Jersey continues to suffer from inadequate business volumes. It is however, in the process of re-establishing its customer base and an improvement in throughput is expected during the second half of 2004. At Deltaport and Vanterm in Vancouver, throughput numbers have risen 3% compared with the same period last year and average revenues per box increased slightly due mostly to the weakening US Dollar. Howland Hook Terminal on Staten Island, New York, has continued to improve its underlying performance after many years of significant under achievement. This terminal has now attained sustained profitability levels,” Mr. Tung said.
“The Group’s wholly owned and majority owned property investment and development businesses have continued to perform well in the first half of the year and once again have achieved results ahead of budget. Wall Street Plaza in New York continues to perform well and ahead of budget with its vacancy rate falling and standing at just 1.5%. In Shanghai, the residential housing market has retained its strength during the first half of the year and the sales price of our Century Metropolis units remained firm. Our Changle Lu project in the Luwan district of Shanghai is progressing as planned. The performance of Beijing Oriental Plaza and its prospects are expected to show further improvements as higher occupancy levels at increased rates under renewed leases begin to have their effects,” said Mr. Tung.
“The unrelenting processes of containerisation and globalisation continue and the levels of global consumer demand for goods sourced from China and the Far East remain stronger than have been forecast. At present, there are no signs of any change to the fundamental supply and demand balance. The unprecedented length of the shipyard orderbook, which fixes the supply of new tonnage capacity into what is now possibly 2008, and the demand side strength in container volume growth give us confidence as we move towards and into 2005,” commented Mr. Tung.
“There will be temporary negative influences upon container freight rates in some trades since the delivery schedule for new tonnage is not an even one and the consequent step increase in available capacity may serve to push spot freight rates slightly lower,” concluded Mr. Tung.
Mr Tung cautioned however that “In the longer term, the recent record level of oil prices, if sustained and without corresponding increases in production, have the potential to influence overall levels of economic growth and to significantly slow the growth in container volumes from the levels to which we have lately become accustomed.”
During the period, the Group took delivery of four “SX Class” 8,063 TEU newbuildings, the OOCL Rotterdam, the OOCL Hamburg, the OOCL Qingdao and the OOCL Ningbo. The Group remains committed to six other “SX Class” vessels of 8,063 TEU, two for delivery in each of 2005, 2006 and 2007. It also remains committed to eight 5,888 TEU vessels under long-term charter arrangements from Japanese owners the delivery of which will take place from late 2005 into early 2007.
OOIL continues to maintain a prudent financial position, with a strategic goal of maintaining a net debt equity ratio of less than 1.0. Nicholas Sims, the Group Chief Financial Officer said that the Group’s net debt to equity ratio as at 30th June 2004 had fallen to 0.25 : 1 compared with 0.38 : 1 as at the end of 2003. He also said that, as at 30th June 2004, the Group had total cash, bond and portfolio investment balances of US$916.3 million and that various options were under consideration with regard to the appropriate level for these reserves.
The Board of Directors has recommended an interim dividend of US12 cents (HK94 cents) to be paid on 17th September 2004 to those ordinary shareholders whose names appear on the register on 6th September 2004. Business forecasts for the second six months of 2004 remain equally as positive and the Board of Directors will consider a further dividend for the full year as performance and future business prospects dictate.
OOIL owns one of the world’s largest international integrated container transport businesses which trades under the name “OOCL”. Its investments are principally in international container transport, container terminal operations, commercial property in New York, business interests in the People’s Republic of China and portfolio investment securities. With more than 160 offices in 50 countries the Group is one of Hong Kong’s most international businesses. OOIL is listed on The Stock Exchange of Hong Kong Limited.
