Cosco Shipping Energy sounds profit warning
But annual meeting hears of counter-cyclical response, including seizing golden LNG growth opportunities
July 23rd, 2018 13:14 GMT
by Geoff Garfield
Published in TANKERS
China’s state-owned tanker and LNG carrier group Cosco Shipping Energy Transportation (CSET) is braced for a sharp reversal in earnings.
The company says it expects to lose CNY 210m ($30.94m) to CNY280m ($41.26m) in the first half of 2018 after being impacted by the tough crude oil shipping market.
Cosco targets LES deal as Beijing gives blessing to takeover drive
Read more
Cosco Shipping Energy eyes LNG orders
Read more
The deficit compares with net income of CNY 851.6m in the same period a year ago, according to a statement to the Shanghai Stock Exchange.
CSET blames a slowdown in oil import growth to countries including China, lower oil inventories, weaker freight rates and higher fuel prices.
In a statement following the company’s annual general meeting recently, CSET referred to international crude transportation in 2018 “lingering at the bottom of the industry cycle.”
Daily income of major ship types had fallen to an historical low.
But in response to the severe market situation it was adopting a counter-cyclical development strategy, accelerating various “transformations” and completing its development into what it described as a full scale tanker transportation service provider.
Simultaneously, it was seizing the “golden development period of LNG transportation”, actively exploring clean energy transportation such as methanol, ethanol and ethane, as well as entering the “blue ocean” of new energy transportation.
CSET earlier this year said it would grow its LNG fleet after carding stronger than expected profits in 2017.
That could include more LNG newbuildings as it aimed for a fleet of 38 such vessels by 2020.
CSET, the former China Shipping Development Co, reported a profit of CNY 1.77bn for 2017, although this was down 8.17% from CNY 1.93bn year-on-year.