- Liftings increased by 11.6%
- Turnover increased by 19% to US$2,248 million
- EBITDA of US$439.7 million (US$377.3 million last year)
- Profit attributable to shareholders of US$308.9 million (US$268.4 million last year)
- Earnings per share of US49.4 cents (US44 cents last year)
- Interim dividend of US12 cents (HK94 cents) per ordinary share
- Delivery taken of two 8,063 TEU new vessels
- Ordered another two 4,500 TEU new vessels
- Improved results from terminal operations
- Property development projects progressed as forecast
Orient Overseas (International) Limited (“OOIL”) Group today announced a profit before taxation of US$329.4 million compared with US$283.2 million for the same period last year. After taxation and minority interests, the Group reported a profit of US$308.9 million, compared with US$268.4 million earned during the first half of 2004.
OOIL Chairman, Mr C C Tung, said “We have continued to experience strong market conditions during the first half of 2005. Volumes have continued to grow robustly and average freight rates have continued to improve compared with the same period last year. This further improvement in overall performance has been due to the continued strong performance of Orient Overseas Container Line (“OOCL”), the Group’s core international container transport business, and to a significantly improved contribution from our container terminals business.”
“Compared with the corresponding period last year, OOCL’s total liftings increased by 11.6% and average rates per TEU increase by 7.4%. The deployment during the first half of the year of a further two of our total series of twelve 8,063 TEU “SX” Class newbuildings contributed towards an overall 11.2% increase in loadable capacity. Despite this significant increase in fleet size, the strength in volume growth has been such that overall load factors showed a slight improvement as compared with the first half of 2004” added Mr Tung.
“The continued pursuit of improved operational efficiency and tight control over costs together with the ongoing investment in IT capabilities have again resulted in benefits. Business and administration costs have continued to fall as a percentage of revenue as they have on a per TEU basis when compared with the same period last year. However, other fixed and variable costs have risen significantly during the first half of the year due mainly to the increased cost of bunkers, higher charterhire costs incurred on our fleet of chartered-in vessels and higher inland cost,” said Mr Tung.
“In respect of our membership of the Grand Alliance, P&ONedlloyd are expected to withdraw sometime in February 2006 as a result of their pending acquisition by Maersk-SeaLand. The remaining four members, Hapag-Lloyd, MISC, NYK and OOCL, have jointly expressed that they are united in their pledge to continue to provide a high quality service to their customers. The new vessels ordered by Hapag-Lloyd, MISC, NYK and OOCL will be deployed to meet the expected growth in demand and services will be enhanced further to offer more options to customers. The four remaining members, with their combined resources and expertise, are together confident of their ability to provide the best level of service,” commented by Mr Tung.
“During the first half of 2005, a total of 1.137 million TEU were moved through the Group’s four terminals in North America, up 15.6% from the comparable period of a year ago. Global Terminal in New Jersey has successfully rebuilt its customer base and throughput volume in the first half of 2005 climbed to 229,000 TEU, up by a significant 54.0% from the comparable period of a year ago. At Deltaport and Vanterm in Vancouver, throughput volume had increased by 5.5% to 672,000 TEU. The Group’s other east coast terminal on Staten Island was renamed New York Container Terminal on January 1, 2005 saw its volume increase by 18.3% to 236,000 TEU in the first half of 2005.” Mr Tung added.
“The Group’s wholly owned and majority owned property investment and development businesses have continued to be profitable in the first half of the year. Wall Street Plaza in New York has continued to perform to budget and has maintained an occupancy rate of over 99%. Our property development projects in the Greater Shanghai area continue as planned. The majority of the final phase units of Century Metropolis have been sold with just 1.1% of the total units remain unsold. The Changle Lu project in the Luwan district of Shanghai is progressing in both its planning and resettlement. We are also moving forward with the planning of the commercial/retail project on Heng Shan Lu, Xuhui District, Shanghai. We are finalising the master plan for the two sites in Hua Qiao township, Kunshan, Jiangsu Province. The performance of Beijing Oriental Plaza in the city of Beijing continues to perform as forecast and to record profits at the project level.” said Mr Tung.
“Overall, freight rates currently retain their strength and there appear to be no specific factors looming which will fundamentally change the present supply and demand balance thereby pushing freight rates either one way or the other. It would seem to be a fact, however, that the tonnage scheduled for delivery during 2006 is greater as a percentage of the current world fleet than has been delivered and deployed over the past few years. This is an issue to be contended with. However, in 2004 for example, the Trans-Pacific eastbound trade grew by 15.1% and the Asia/Europe westbound trade by 16.5%. Such high rates of volume growth are not being forecast at present but, were they to approach these levels, it would be sufficient to maintain the supply and demand balance and alleviate any downward pressure on freight rates. Volume growth at levels any lower than these is, of course, bound to create downward pressure on rates,” commented Mr Tung.
Mr Tung cautioned however that “Volumes have continued to grow this year and freight rates so far have stayed firm. But costs have risen and continue to rise to the extent that margins are coming under heavy pressure. Higher charterhire costs continue to have their effect as the remainder of our chartered-in fleet is renewed and there appear to be few signs yet of any significant change to shorter term charter rates for smaller sized tonnage. The other increases can be largely attributed directly and indirectly to the higher fuel prices with which the world generally is now having to contend. Bunkers have cost us, on an average price per ton basis, 30% more during the first half of 2005 than during the same period last year. Third party transportation costs and terminal charges have also risen significantly to the extent that our concentration must now be on the containment of these cost increases.”
During the period, the Group took delivery of two “SX” Class 8,063 TEU newbuildings, the OOCL Atlanta and the OOCL Tianjin. The Group remains committed to four other “SX” Class vessels of 8,063 TEU, two for delivery in each of 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.
During the first half of 2005 the Group has committed to a further two 4,500 TEU panamax sized vessels to be built by Samsung Heavy Industries Co. Ltd. in South Korea. They are scheduled for delivery in March and May of 2008. These are in addition to the four ordered last year also from Samsung and the two similar sized vessels ordered from Hudong-Zhonghua Shipyard in China.
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 2005 stood at 0.24 : 1, a slight decrease from the restated 0.26 : 1 as at the end of 2004. Additional finance for our newbuilding programme has been arranged and drawn down but, in recognition of the continued strong cash generation from our businesses, an amount of ca. US$300 million has been utilised from internal resources to pre-pay certain borrowings. He also said that as at 30th June 2005, the Group had cash and portfolio investment balances of US$987.2 million.
The Board of Directors has recommended an interim dividend of US12 cents (HK94 cents) to be paid on 16th September 2005 to those ordinary shareholders whose names appear on the register on 5th September 2005. We remain confident in the second six months of 2005 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.
ORIENT OVERSEAS (INTERNATIONAL) LIMITED
(Incorporated in Bermuda with limited liability.
