Hong Kong-based Orient Overseas International, Ltd. (OOIL), the parent company of liner carrier OOCL, on Wednesday said its 2012 operating profits rose 86.9 percent year-on-year in 2012 to $343.2 million.
Revenue for the company rose 7.4 percent to $6.5 billion, while container volume rose 3.7 percent to 5.2 million TEUs. OOCL’s revenue per TEU carried rose 2.9 percent to $1,131.
At the end of 2012, OOIL had net debt of $542 million and liquid assets of $2.3 billion.
“While 2012 was a profitable year for the group, the container transportation market continued to be challenging as the industry struggled to absorb substantial new-build vessel capacity while facing ongoing weak demand growth,” said OOIL Chairman C.C. Tung. “Freight rates were particularly low at the start of the year but did recover over the first half and into the second half of 2012. During that period the industry was able to absorb the new capacity being delivered, but by the fourth quarter, the further deterioration in the Eurozone economies and the muted growth in the United States saw a deterioration in both freight rates and load factors as excess capacity chased inadequate demand, resulting in a disappointing end to the year.
“After a strong first half performance and a pleasing third-quarter, OOCL’s operating profitability was impacted by the downwards pressure on freight rates during the last quarter of the year. Competitive pressure was most intense on the Asia-Europe trade as carriers sought to maintain volumes despite a reduction in trade levels,” Tung added. “There was some partial offset to this pressure with bunker fuel prices coming down from the very high levels experienced in the first half of the year and remaining stable through and past the year end.”
While the line neither received nor ordered any new ships in 2012, it is scheduled to receive the first of its 13,200-TEU vessels this year, which will be the largest ships in its fleet.
“With a further increase in new build vessel capacity delivering in 2013, competition and resultant pressure on freight rates will continue to be intense,” Tung said. “The industry’s ability to further absorb additional capacity are being tested and there are risks to service levels given the reduced number of loops being run on the major trade lanes.” - Eric Johnson