Reuters: China COSCO Holdings , flagship of the country’s premier shipping firm, posted a higher-than-expected net loss of 2.76 billion yuan ($430 million) for the first six months of the year due to falling freight rates and high oil prices.
China COSCO , which operates the world’s largest bulk cargo fleet and is the No. 6 container shipping firm globally, said the outlook for the second half was complex and ever changing.
“There is excessive supply in the market. In the second half of the year, it is expected that the delivery of 8000+TEU large vessels will put pressure (on) the major routes,” it said in a statement to the Hong Kong exchange late on Thursday.
The country’s top shipping conglomerate has sought better terms for contracts signed during the peak of the market, but its move to halt payments to several ship owners in the last few weeks has threatened to taint its reputation within the international shipping community.
Most analysts have taken a bearish view on the global shipping market, arguing that freight rates in the dry bulk segment have limited upside due to looming overcapacity in the second half of the year.
China COSCO also said it had proposed U.S. dollar bond issuance of up to $2 billion with a term of no more than 10 years.
“In order to satisfy all capital needs of the company for future operation and after taking into account of the tight credit availability within the PRC and the fact that the company requires capital in U.S. dollars currency, the company intends to issue the bonds through its offshore-wholly owned subsidiary,” the firm said.
China COSCO reported a half-year net loss of 2.76 billion yuan compared with a 3.41 billion yuan profit a year earlier. The figure was higher than the average forecast of a 1.4 billion yuan loss from three analysts polled by Reuters.
The company warned on Aug. 9 it expected to make a net loss in the first half of this year.
China COSCO’s steep share price drop however makes its valuation seem reasonable for a minority of analysts despite the short-term overhang.