Cosco Shipping posts 71.5% bunker sales growth, drop in profit

Sinfeng Marine Services achieves an increase in sales volume of almost 1 million tonnes.

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Updated on 24 Mar 2017 07:04 GMT

Cosco Shipping International (Hong Kong) Co., Ltd (Cosco) reports that revenue from sales of marine fuel and other products increased by HK$1,986.6 million, or 71.5 percent, to HK$4,766.6 million (US$613.7 million) in 2016, up from HK$2,780 million the previous year.

Cosco said the increase in revenue was mainly due to the rise in sales volume as Sinfeng Marine Services Pte. Ltd, a wholly owned subsidiary of the Hong Kong-listed company, recorded sales of 2,114,548 tonnes in 2016, representing a jump of 967,637 tonnes, or 84.4 percent, compared to the previous year's tally of 1,146,911 tonnes.

Double Rich Ltd, which is 18 percent owned by Cosco and mainly engaged in the trading of fuel and oil products and marine fuel supply services in Hong Kong, earned Cosco a profit share of HK$9.1 million - an 11 percent decrease on the HK$10.2 million profit in 2015.

Overall, Cosco's marine fuel and other products segment recorded a profit before tax of HK$12.0 million (US$1.5 million), down from HK$12.1 million in 2015. After-tax profit was HK$11.8 million, down from HK$12.0 million the previous year.

In its results for the year, Cosco posted a decline in after-tax profit for the year of HK$125.6 million, or 34.7 percent, to HK$236.5 million (US$30.4 million). Gross profit fell by HK$146.5 million, or 21.2 percent, to HK$544.2 million; this was despite an increase in revenue of HK$1,430.7 million, or 23.8 percent, to HK$7,430.3 million, as the cost of sales rose by HK$1,577.1 million, or 29.7 percent, to HK$6,866.1 million.

Commenting on the decline in gross profit, Cosco said it was "mainly attributable to the decrease in price and volume of container coatings as well as the increase in revenue from the low-gross-profit-margin marine fuel and other products [segment]".

During the year, revenue from Cosco's shipping services segment (which includes coatings, marine equipment and spare parts, ship trading, insurance broking and marine fuel and other products) rose by 29 percent to HK$6,661.9 million, up from HK$5,163 million in 2015. The increase was said to be mainly due to the increase in revenue from marine fuel and other products.