Orient Overseas International (OOI) has announced a profit attributable to equity holders for 2017 of US$137.7 million, compared to a loss of US$219.2 million in 2016.
Earnings per ordinary share in 2017 was US22.0 cents, whereas loss per ordinary share in 2016 was US35.0 cents.
The Chairman of OOIL, C C Tung, said, “The economic backdrop for 2017 was more robust than forecasters had expected. Following a decade of low growth, we saw healthier performance in both GDP and trade volumes across most of the world’s major economies. This was a welcome change after the industry’s low point of 2016.”
“This synchronicity of growth, a rare phenomenon in recent memory, may bode well for the sustainability of the recovery,” noted Tung.
“However, growth on the supply side continues across the trade lanes. Even if the ordering of new vessels remains muted in relative terms, upsizing of capacity continues in certain key routes. Ultra-large vessels ordered in the past few years are now being delivered and brought into operation. Furthermore, as trade growth improves, the industry continues to introduce additional services using cascaded or previously idled capacity,” said Tung.
“This combination of better economic growth and continuing (if moderated) growth in supply, along with higher bunker prices, means that for OOIL and our peers, the environment remains merely one of gradual recovery, not the boom that some analysts expected when improved economic data first started to appear,” Tung remarked.
During the year, the Group took delivery of five of a total of six ‘Giga’ Class 21,413 TEU vessels ordered from the Samsung Heavy Industries shipyard. The last vessel in the series was delivered in January 2018. No orders for new buildings were placed during the year.
2017 was a year of tremendous growth for OOCL in both European and US bound trades. For the full year 2017, OOCL’s liftings were up 3.6% overall, but 16.3% on Trans-Pacific and 19.7% on Asia-Europe. This growth outpaced the already strong volume growth seen in the market as a whole.
“One of the cornerstone strategies for many years of the OOIL group has been to work in alliance. We are now almost into the second year of the Ocean Alliance with COSCO, CMA CGM and Evergreen. Alliance membership continues to deliver meaningful benefits in terms of network and scale, and very much remains part of delivering our growth strategy,” Tung continued.
“The second phase of our Middle Harbor Redevelopment Project in California commenced operations towards the end of 2017. We are delighted with the progress made so far, and already feel the benefit of greater efficiency through welcome cost gains,” remarked Tung.
“OOCL Logistics (OLL) continues to develop steadily and profitably. The profitability of OLL’s domestic logistics activities improved. OLL’s core business of managing the international supply chains of large retailers in North America and Europe retained its role as the key profit driver. The goal is to build and grow the business, in what is unquestionably a highly competitive market,” Tung said.
“Tying together the success of these three strands, our liner activities, our terminal activities and our logistics activities, are many things, not least the OOCL take it personally spirit, which applies to everything we do, from delivering quality service to handling customer relationships and managing costs. A key element of being able to deliver this total service is our approach to digital technology. In addition to enhancing supply chain visibility for customers, we are also embracing the use of data analytics to enhance yield management and internal operating efficiencies. The OOIL group remains fully committed to continuing its quest to invest in the development of digital technology,” Tung added.
“2017 has been a year of considerable growth for the group. It is pleased to note that this growth has been achieved without a deleterious effect on the profit and loss account. We have now taken delivery of all six of our 21,413 TEU ships, with these titans of the sea providing us not only with additional capacity, but also with a more efficient cost base,” noted Tung.
“Once the large new vessels scheduled to be delivered in 2018 have been brought into service, with a comparatively low order book for 2019 and 2020, and taking into account the improved economic data, we are hopeful that the industry may start to enjoy greater stability than it has done for many years. In the meantime, we maintain a positive, if somewhat cautious, stance,” remarked Tung.
“Against this gradually improving economic background, and in the context of a consolidating industry, the future for OOIL appears to be promising. We are well placed to continue to grow, and look forward to maintaining our track record of being amongst the most consistently highest performers in the industry,” Tung concluded.
Alan Tung, the Group’s Chief Financial Officer, commented, “As at 31st December 2017, the Group had total liquid assets of US$2,534.5 million compared with debt obligations of US$624.2 million repayable in 2018. The net debt to equity ratio remained low at 0.43 : 1 at the end of 2017. We remain focused and deliberate in our efforts to maintain a sustainable balance sheet that allows the Group the ability to retain the widest degree of initiative and flexibility as a competitive edge. We are committed to ensuring an appropriate balance between adequate liquidity, efficient capital structure suitable for our industry, and sustainable returns to shareholders throughout the economic and market cycles.”
OOIL owns one of the world’s largest international integrated container transport businesses which trades under the name “OOCL”. With more than 360 offices in 70 countries, the Group is one of Hong Kong’s most international businesses. OOIL is listed on The Stock Exchange of Hong Kong Limited.