Sat, Nov 16, 2019 page12

• Yang Ming quarterly loss widens

  STRATEGIC DECISION: With a lessor in a distressed financial situation, Yang Ming had to recognize an estimated loss of NT$1.38 billion in its accounts for the third quarter

  • By Kao Shih-ching / Staff reporter
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  Yang Ming Marine Transport Corp (陽明海運) has posted a widened quarterly loss for last quarter after a strategic decision not to exercise options with respect to two formerly chartered vessels cost it NT$1.38 billion (US$45.19 million).

  Last quarter’s net loss deepened to NT$1.37 billion, compared with a net loss of NT$909 million in the same period last year.

  That translated into losses per share of NT$0.53, it said.

  Keelung-based Yang Ming has been struggling to turn a profit after it returned to the black briefly in the fourth quarter last year.

  The shipping company sold two 8,200 twenty-foot-equivalent-unit container vessels to a leasing company in 2008 and 2009, then immediately leased them back, it said in a filing with the Taiwan Stock Exchange.

  The leases included purchase options on the two vessels at the end of the term, for which Yang Ming paid a deposit, the company said.

  With the leases due to expire at the end of this year, the company decided not to exercise the options, as it would be more economical to buy new vessels, it said.

  The deposit should have been returned when Yang Ming decided not to exercise the options, but the lessor is in a distressed financial situation, so Yang Ming recognized the estimated loss of NT$1.38 billion in its accounts to comply with international accounting rules, it said.

  In the first three quarters of the year, Yang Ming’s cumulative net loss shrank 50 percent year-on-year to NT$3.32 billion, or losses per share of NT$1.28, it said.

  Yang Ming is conservative about this quarter, as global cargo demand is forecast to remain weak due to geopolitical tensions and a US-China trade dispute, it said, citing a forecast by Paris-based maritime consultancy Alphaliner.

  However, the company is more upbeat about next year, as growth in supply is expected to slow following the implementation of the International Maritime Organization’s regulation that requires ships to use fuel with a maximum 0.5 percent sulfur content, it said.

  Meanwhile, Wan Hai Lines Ltd (萬海航運) posted a net profit of NT$650 million for last quarter, an increase of 51 percent year-on-year driven by rising revenue and solid management of costs, company spokeswoman Laura Su (蘇麗梅) said by telephone.

  Gross margin improved to 9.53 percent last quarter, compared with 7.03 percent a year earlier, Su said.

  The Taipei-based company posted a cumulative net profit of NT$2.39 billion for the first nine months, or earnings per share of NT$1.08, an 85 percent year-on-year increase, Su said.

  Wan Hai, which makes 70 percent of its revenue on intra-Asia routes, expects the growth momentum to continue into this quarter, despite an ongoing US-China trade dispute, as it has gained orders from its Chinese clients, Su added.
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