China Cosco Loss Widens as Cargo Rates Slump, Fuel Price Climbs

April 26 (Bloomberg) --China Cosco Holdings Co. (1919), the nation’s biggest publicly traded shipping company, posted a wider first-quarter loss because of higher fuel prices and lower fees for carrying containers and commodities.

The net loss widened to 2.67 billion yuan ($423 million) from 502 million yuan a year earlier, the Tianjin, China-based company said in a Hong Kong stock exchange filing today. Sales fell 4.6 percent to 15.7 billion yuan.

Average rates at Cosco’s container-shipping unit, Asia’s biggest, fell 15 percent from a year earlier, according to Bloomberg calculations, as carriers competed to fill expanding fleets and the European debt crisis stymied demand. Commodity- shipping volumes declined 15 percent from a year earlier, while rates plunged industrywide amid overcapacity.

“The dry-bulk industry supply imbalance is likely to worsen this year,” Nomura Holdings Inc. analysts led by Andrew Lee said in an April 23 note. They also said China Cosco would return to profit only in 2014, compared with an earlier prediction for next year. The company had a full-year loss of 10.5 billion yuan in 2011.

Cosco’s average Asia-Europe container rates fell 18 percent, based on numbers in the statement. Volumes on the route rose 21 percent, while revenue fell 9.8 percent. Trans-Pacific shipments rose 21 percent, more than double the increase in sales.

First-quarter fuel prices averaged 22 percent higher than a year earlier in Singapore trading, according to data compiled by Bloomberg. The Baltic Dry Index (BDIY), a benchmark for commodity- shipping rates, was 36 percent lower.

The shipping line, which also has a stake in container- terminal operator Cosco Pacific Ltd. (1199), fell 1.5 percent to HK$4.51 in Hong Kong trading today before the earnings announcement. It’s risen 18 percent this year, outperforming the benchmark Hang Seng Index’s 13 percent gain.

China Cosco had a fleet of 376 owned and leased dry-bulk ships as of March 31, compared with 374 three months earlier, according to the statement. Its container-ship fleet totaled 159 ships, with another 30 on order.

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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