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CIMC, the world's top maker of shipping containers, posted a 52 percent increase in its second-quarter net profit, its slowest growth in six quarters despite strong sales and rising margins.
China International Marine Containers Co Ltd an arm of ports-to-roads conglomerate China Merchants Holdings said its earnings were hit by the rising price of steel, a key raw material, and China's revaluation of the yuan, though it gave no forecast for the rest of 2005.
CIMC reported net earnings of 1.14 billion yuan (US$141 million) in the quarter to June, compared with 749.27 million yuan (US$92.5 million) in the same quarter of 2004, as calculated by Reuters from figures announced previously.
That was its slowest growth in a quarter since the fourth quarter of 2003 when its net profit rose 43 per cent. Its earnings more than tripled in 2004, and surged nearly five-fold in the first quarter of this year. "Our company faced rising steel prices and increased costs from volatility in the yuan's exchange rate," it said in a filing to the Shanghai Stock Exchange yesterday.
China revalued its yuan by 2.1 per cent and dropped the currency's peg against the US dollar on July 21 a move seen as boosting corporate buying power and domestic consumption in the long run, but hitting exporters like CIMC in the near term.
Domestic steel prices remain at high levels, despite falling since April after hitting their peak levels for more than a decade in March.
Container makers, including CIMC and smaller rival Singamas Container Holdings Ltd, are running into stormy seas as the unprecedented global container shipping boom that began in 2003 loses steam, analysts have said.
Shipping lines, which enjoyed a boom due to robust trade fuelled by China's roaring economy, are seeing freight rates hit by slower Chinese demand and an expected glut of container ships.
For the first half of this year, CIMC which along with Singamas dominates the worldwide manufacture of containers sold 831,284 TEUs (20-foot equivalent units) of containers, up 15 per cent year-on-year, as profit margins rose 4.95 per cent, it said.
(China Daily August 19, 2005)
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