Bulk shipper First Steamship Co Ltd (益航) expects steady shipping business this year, with earnings set to rise from last year thanks to disposal gains from share sales and the contribution of its department store business in China.
It said on Monday last week that it expected the bulk shipping sector this year to be similar to last year, and it has managed to maintain flexibility in its fleet of nine vessels in order to reduce market risk and ensure a stable income.
Two of the vessels are leased on long-term contracts of more than five years, four are leased on one-year contracts and the other three are operated under a shipping pool agreement with other companies.
A Kamsarmax-type cargo ship is under construction and will be delivered in November next year, the company said.
The Baltic Dry Index — which tracks the costs of transporting dry commodities such as coal, iron ore and grain — experienced a downward correction in the first quarter, but the company said the outlook for dry bulk shipping is still bullish. As the index has moved up since last month, when transport costs increased along with the rising commodities trade, the company said it anticipates this momentum would continue.
“We believe the index will bounce back to the level of 2018,” First Steamship said in a conference presentation on Monday.
Gross profit from shipping rose 34.42 percent to US$12.73 million last year, compared with US$9.47 million a year earlier.
However, shipping accounted for just 13.7 percent of First Steamship’s total revenue of NT$8.04 billion (US$260.1 million) last year, with its retail business in China bringing in 80.3 percent. Other operations include leasing, financial services and property development.
The company reported a weak net income of NT$6 million for last year, down from NT$565 million a year earlier, mainly due to a non-operating loss of NT$279 million at its retail arm, Grand Ocean Retail Group Ltd (大洋百貨), as well as a non-operating loss of NT$692.1 million related to its three other subsidiaries: Hong Kong-listed Sandmartin International Holdings Ltd (聖馬丁國際控股), Mariner Finance Ltd (友成融資租賃) and Taiwan Environment Scientific Co Ltd (台境企業).
Earnings per share were NT$0.01 last year, compared with NT$1.06 the previous year.
In the conference, Grand Ocean spokesperson Chang Chin-kuo (張進國) said the retailer would continue restructuring and focus on e-commerce, while targeting young consumers.
After shutting down three underperforming department stores in China’s Xiantan, Suzhou and Tongling last year, the retailer now operates 15 outlets and plans to launch a new store in Shanghai this year.
First Steamship last month sold all of its 286.05 million, or 19.22 percent, shares of Russian casino operator Summit Ascent Holdings Ltd (凱升控股) to Victor Sky Holdings Ltd (勝天控股) for NT$2.18 billion.
It invested NT$1.14 billion in Summit Ascent in 2017. The share sale would contribute NT$1.55 to the company’s earnings per share this year, chairman Jerry Kuo (郭人豪) said on Monday.
In the first quarter, First Steamship’s consolidated revenue climbed 5.19 percent to NT$2.14 billion, from NT$2.03 billion a year earlier.
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