If there was any doubt that 2010 represented a very robust recovery for some in the shipping industry compared to the upheaval of 2009, the Hong Kong-based parent of Orient Overseas Container Line (OOCL) put it to rest Monday.
Orient Overseas International, Ltd. (OOIL), which along with its subsidiaries including OOCL is known internally as the Group, announced that it had recouped a $377 million loss suffered in 2009 and ended 2010 with a $842 million profit.
Chairman C.C. Tung said the rebound "has been beyond all expectations."
"Unusually strong demand in the first half of 2010 and positive trading conditions throughout the remainder of the year saw our lifting volumes nearing 2008 levels. Improvements in freight rates across all trades, combined with cost savings implemented in 2009, have produced a record profit for our liner operation in 2010."
The Group's carrier arm, OOCL, reported 4.8 million TEU lifts in 2010, a 14.6 percent increase. The carrier's vessel utilization rate, a measurement of how well its ships are being used, grew from 74 percent to 81 percent. Average revenue per TEU rose to $1,178, a 27.5 percent increase over 2009.
However, despite the bumper year, Tung cautioned, "While the ongoing improvement in trade volumes and freight rates is good news, fuel and other cost pressures are again re-emerging as the global economic recovery continues. Continued focus on operational efficiency and pricing discipline will accordingly remain important in the current year,” noted Mr. Tung."
The Group posted profits from continuing operations of $1.87 billion for 2010, a massive jump from the $402 million loss suffered in 2009. These profits include the $1 billion net profit from the firm's 2010 sale of OODL, the Group’s former People's Republic of China property development business. Group profits were based on $6.03 billion in revenues generated during 2010, a major increase over the $4.4 billion in revenue generated in 2009.
Group Chief Financial Officer Kenneth Cambie said, “As of the 31st of December 2010, the Group had total liquid asset balances of $4.13 million compared with debt obligations of $248 million repayable in 2011. Debt-to-equity ratio changed from 0.31:1 at the end of 2009 to a net-cash position at the end of 2010 with the receipt of proceeds from the OODL sale.”
Looking forward, Tung said "The immediate outlook for 2011 remains positive though the level of demand growth seen in 2010 on the East-West trades is unlikely to be repeated in 2011."
He said the Group will "continue to invest in the expansion of the OOCL vessel and box fleets, and in the terminal infrastructure needed to support anticipated demand growth."
Near the end of 2010, Group carrier arm OOCL placed an order for two additional vessels with capacity of 8,888 TEU each from Hudong-Zhonghua Shipyard in China. With this new order, OOCL has a total of eight new 8,888 TEU vessels set for delivery between 2011 and 2014, with the first two vessels due in the first half of 2011.
