COSCO calms fears despite 12 pct profits fall

COSCO Pacific Ltd, the terminal and container unit of China's biggest shipping group, said support from its parent will be "consistent", despite recent hardship in the group.

Hong Kong-listed COSCO Pacific is one of the six public companies under the COSCO Group, which is struggling to swing back to profit in the aftermath of the global financial crisis.

Pacific on Tuesday reported a 12 percent drop in annual profits for 2012 to $342.19 million.

The group's three other major listed units, China COSCO Holdings Co Ltd, COSCO Shipping Co Ltd and China International Marine Containers (Group) Co Ltd, are all expected to report a loss or declined earnings this year.

Wang Xingru, Pacific's vice-chairman, admitted the group as a whole is mired in difficulty but insisted "worries the group's weakness will endanger COSCO Pacific were totally unnecessary".

He added: "The group's support to our company is strong as always."

Despite the fall in profits, Pacific's shares in Hong Kong dropped just 0.36 percent on Tuesday to HK$11.12, amid a 0.23 percent gain in the benchmark Hang Seng Index to 22303.18 points.

Wang's comments came amid market fears that more restructuring by the parent might affect Pacific's already teetering business.

Shanghai-listed China COSCO Holdings was forced to restructure its business this year after two straight years of losses, which some suggested might force it to delist.

The restructuring was part of the group's plan to return to profit this year.

Group General Manager Ma Zehua said earlier this month that he was confident it would return to the black in 2013.

In an effort to trim its losses, China COSCO Holdings said on March 11 that it planned to sell its logistics unit, COSCO Logistics Co Ltd, which has been one of its biggest loss-makers over the past two years.

Pacific's overall loss was blamed on a dramatic 47 percent fall in profits at China International Marine Containers, in which it has a 20 percent stake, which saw a slump in its marine engineering operations.

Setting aside profits from CIMC and non-recurring items, Pacific's business is still healthy, posting a 14.6 percent profit growth to $280.30 million, on total revenue which rose 22.8 percent.

Revenue from its terminal business jumped 24.4 percent to $402.16 million, and its container revenue grew 21.6 percent to $336.22 million.

Profit from company's terminal at the Greek port of Piraeus, operated by its Greece unit Piraeus Container Terminal SA, more than doubled in 2012 to $19.86 million.

Asked if COSCO Pacific plans to buy more terminals in Greece, Wang said the company is always looking, but is currently not in any negotiations with the local government or terminal operators.

The company expects capital expenditure of up to $1 billion this year, a year-on-year increase of more than 10 percent, half of which will be in its terminal business.

However, the company expects the growth of that business to slow this year, amid rising operating costs and tax expenses. It expects its total annual terminal handling capacity to grow by 4.6 percent in 2013 to 63.1 million twenty-foot equivalent unit.