Hong Kong-listed port operator Cosco Pacific revealed yesterday that its 2006 net profit had fallen 13% as a result of accounting losses arising from nontradeable-share reform at its affiliate in southern China, writes Mike Grinter in Hong Kong. This is turn caused net profit to slip to $291.1m for the year ended December 31, 2006. Revenue was also down at $254m, from $295.6m.

It was Cosco Pacific's 16.2% interest in China International Marine Containers that brought about the accounting loss.

Cosco Pacific said a $55.2m net put options expense relating to the conversion of CIMC nontradeable shares into tradeable equity was the main reason for the decline in profitability.

By removing the accounting loss, which is likely to be refunded this year, the company would have made a profit of $346.3m.

The container terminals brought a net profit of $90.52m during 2006, reflecting a modest 2.8% increase in overall profitability compared with 2005.

Box throughput for the period under review grew strongly and chalked up 32.79m teu, an increase of 26% from the 26.08m teu recorded in 2005.

Cosco Pacific's port investments in China's Bohai region, which include the strategic cities of Shanghai and Tianjin, brought the most noticeable growth benefits as throughput soared 43%.

Cosco Pacific invested in developing terminals in Ningbo, Tianjin and Guangzhou during 2006. It said it will add 51 new berths to its portfolio by 2010.