Wan Hai Lines Ltd (萬海航運) last week reported the highest earnings per share among the nation’s three major container shippers for last year, thanks to its strategy of significantly decreasing services on routes to the US and Europe and focusing on the Asian market.
With the gradual recovery in global economy, the company said it planned to raise its profit sources this year by appropriately raising transport capacity for certain routes to the US and South America.
ASIA ROUTES
Wan Hai — the nation’s third-largest container shipper with a focus on shorter intra-regional routes in Asia — posted a net profit of NT$1.83 billion (US$22.44 million), or NT$0.82 per share for last year, Taiwan Stock Exchange data showed.
The container shipper’s profitability last year also showed a significant rebound from net income of NT$20.31 million, or NT$0.01 per share, in 2011, data showed.
Similarly, the nation’s two largest container shipping firms by fleet size, Evergreen Marine Corp (長榮海運) and Yang Ming Marine Transport Corp (陽明海運), both returned to the black last year.
Evergreen reported net income of NT$128.53 million, or earnings per share (EPS) of NT$0.04 for the whole of last year, from losses of NT$3.09 billion, or NT$0.89 per share, recorded in 2011, the company said in its filing to the Taiwan Stock Exchange.
Yang Ming’s net profit for last year was NT$51.44 million, or NT$0.02 per share, compared with losses of NT$9.4 billion, or NT$3.33 per share, recorded a year earlier, the company’s financial data showed.
Both Evergreen and Yang Ming have confirmed they would not pay dividends to shareholders this year. Wan Hai has yet to announce its dividend payout plan.
Various industrial pundits have attributed the container shipping industry’s improving profitability last year to shippers’ consensus in controlling supply to maintain reasonable freight rates.
RATE CUTS
Several global container shippers cut rates to pursue a greater market share in 2011, seriously eroding the industry’s profitability and resulting in a loss-making year.
However, given the flat growth expected in new supply this year, Evergreen vice chairman Bronson Hsieh (謝志堅) said last month that market conditions could become more balanced from last year, further helping major shippers’ sales and profitability.
However, a report issued by Horizon Securities (宏遠證券) on Thursday last week said the container shipping sector may see its profitability swing back into the red this year, citing its unsuccessful rate-hiking last month.
The latest trend in Shanghai Containerized Freight Index showed the freight rate has yet to reach the level recorded in the same period last year, raising uncertainty about the industry’s momentum, the report said.
Citi Research, a division of Citigroup Global Markets Inc, said in a report on March 19 that it expected Wan Hai to be more resilient in the volatile industry environment this year, shielded by its emerging-market exposure.
“We believe Wan Hai is relatively shielded from industry-wide headwinds given healthier demand outlook in Intra-Asia [and] less supply pressure,” the brokerage said in the report.
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