Orient Overseas (International) Limited (“OOIL”)
today announced a profit attributable to equity holders of US$5,663.6
million for the six-month period ended 30th June 2022, compared to a
profit of US$2,810.9 million for the same period in 2021.
Earnings per ordinary share for the first half of 2022
was US$8.58, whereas earnings per ordinary share for the first half of
2021 was US$4.42.
The Board of Directors is pleased to announce that the
dividend for the first half of 2022 is approximately 70% of the profit
attributable to equity holders at approximately US$3,962 million, with
an interim dividend of US$3.43 per ordinary share and a special dividend
of US$2.57 per ordinary share.
The outstanding performance of the Group was driven by
the continuing extraordinary conditions prevailing in the container
shipping market. As has been the case for over two years, our market is
neither enjoying an extraordinary demand boom, nor suffering from any
lack of vessels in deployment. Rather, levels of demand, which are
better than expected but not phenomenally strong, continue to outpace
the effective level of supply, which is under significant downward
pressure from a combination of congestion, delays and disruptions.
Understanding this is key to any analysis of the current market
situation and of the outlook.
These market forces pushed freight rates upwards on
most tradelanes, and it is these market forces, in addition to our usual
careful attention to cost control, that have driven the strong
profitability that has been achieved during the period.
Throughout this period, it has been more important than
ever to work closely with our customers. In times of congestion and
disrupted schedules, communication and co-operation help not only to
mitigate the challenges of the current operational situation, but also
serve to consolidate and deepen relationships. We are proud of our
reputation for excellent customer service, and we believe that our
efforts through these turbulent times will stand us in good stead as we
seek to extend collaboration with our customers.
The first six months of 2022 produced the highest
half-year revenue in the Group’s history. Compared to the same period
in 2021, OOCL’s total liner liftings for the first half of 2022 reduced
by 7%, total revenue increased by 61%, and revenue per TEU increased by
74%.
The average price of bunker recorded by OOCL in the
first half of 2022 was US$729 per ton compared to US$449 per ton for the
corresponding period in 2021. The price increase of 62% in the first
half of 2022 has led to a 46% increase in total bunker costs for the
first half of 2022, as compared to the corresponding period in 2021,
even though consumption of both fuel oil and diesel oil were lower in
the first half of 2022 than in the corresponding period in 2021.
The Dual Brand strategy of the Group continues to bring
us many advantages. During these challenging times, it has allowed us
to access additional capacity to offer our customers, and to ensure that
we minimise the risk of equipment shortages. One huge advantage of our
Dual Brand strategy is that it allows us to continue to co-operate in
this way, and to achieve tremendous savings through joint procurement
and efficiencies of scale, without ever impairing our ability to provide
complementary offerings to the market under the banner of each brand.
In the first half of 2022, no new-build container
vessel was delivered, and no new order was placed by the Group. The
twelve 23,000 TEU container vessels ordered by the Group in year 2020
are expected to be delivered starting from 2023, and the ten 16,000 TEU
container vessels ordered last year will be delivered from 2024 fourth
quarter to 2025 fourth quarter.
For the first half of 2022, OOCL Logistics revenue and
contribution had good steady increment as compared with the same period
last year. The revenue of the International Business Units exhibited
healthy growth due to the growing demand of international logistics
services. While Domestic Logistics continued to face fierce
competition, the business unit still managed to maintain stable
revenue. With the effort on streamlining processes and the use of IT
systems, costs were further driven down and resulted in satisfying
improvement in profitability.
Looking forward, we see an array of conflicting signals
that provide little clarity in terms of outlook. Undoubtedly, there
are legitimate concerns about the impact of inflation and interest rate
rises on consumer spending in many key economies. Even if US retail
Inventory-to-Sales ratios remain low, we note some year-on-year
increases in absolute levels of US inventory. Indeed, some larger US
retailers have specifically reported that they are holding higher levels
of inventory.
Yet at the same time, consumers are still purchasing
new goods, even if not necessarily the same goods they were buying last
year, and thus far there has not been a complete return of pre-pandemic
patterns of spending on services as opposed to goods. Furthermore,
forecasts from various port and retail sources in the US suggest ongoing
resilience in the demand for imported goods.
At the time of writing, our ships are sailing full on
our main long-haul tradelanes, and are forecast to continue to be fully
loaded in the coming weeks. There has not been much evidence, so far,
of the kind of significant seasonal uptick that is often a feature of
the traditional Trans-Pacific peak season. We continue to monitor the
situation closely.
Anyone trying to forecast the future of container
shipping must focus on what has created the current market, being the
relationship between supply and demand as mentioned above, and not on
any one individual factor. A proper understanding of the current market
and its outlook must calmly consider each of the wide range of causes
that have created current market conditions.
OOIL, as part of the COSCO SHIPPING Group, continues to
be in the vanguard of the advancement of the container shipping
industry, and will work to provide ever more reliable and resilient
services to our customers. Not only in terms of optimising our network
and intelligent growth of our fleet, but also in terms of broader
integrated supply chain “end-to-end” capabilities and our positioning
among the leaders of the digitalisation of our industry, through IQAX,
GSBN and FreightSmart. This commitment to investing in the future,
along with our focus on ESG, and closer cooperation with our customers,
will position us well to continue to be a Vital Link to World Trade.
As at 30th June 2022, the Group had total liquid assets
of US$11,076.9 million compared with debt obligations of US$805.7
million repayable within one year. The Group remained at net cash
position with a net cash to equity ratio of 0.65 : 1 as at 30th June
2022. The Group from time to time prepares and updates cashflow
forecasts for project development requirements, as well as working
capital needs, from time to time with the objective of maintaining a
proper balance between a conservative liquidity level and an effective
investment of surplus funds.
OOIL owns one of the world’s largest international
integrated container transport businesses which trades under the name
“OOCL”. With around 420 offices in about 90 countries/regions, the
Group is one of Hong Kong’s most international businesses. OOIL is
listed on The Stock Exchange of Hong Kong Limited.
* * *
Issued by: Orient Overseas (International) Limited
For further information contact
Martin Kan Investor Relations (852) 2833 3143
Internet address:
https://www.ooilgroup.com
