China Shipping Container Lines (CSCL) and Cosco have both posted operating losses in the first quarter, but the disposal of assets resulted in CSCL turning a profit.
Cosco suffered a net loss of CNY1.8 billion (US$307 million) as operating losses hit CNY597 million. It is believed most of the losses were caused by its container shipping unit, reported Alphaliner.
The results were consolidated for its four main business segments, including dry bulk shipping, container shipping, container terminals and container leasing business.
The hefty loss comes after the company booked $1.2 billion from extraordinary gains from asset sales in 2013. However, the company is not likely to post significant gains from disposals this year.
Instead, it booked a loss of CNY794 million from the sale of 16 vessels for scrap during the first quarter, including 12 containerships of 700-4,200 TEU built between 1989 and 1996 with an aggregate capacity of 35,800 TEU.
CSCL's results on the surface looked strong after achieving a net profit of CNY61.4 million (US$10 million) in the first quarter. However, the positive results were due mainly to extraordinary gains of CNY280.6 million ($46 million) recorded during the quarter from asset sales.
Operating losses, excluding extraordinary gains, reached an estimated CNY233 million ($38 million) during the quarter.
The report said that CSCL will rely on further asset sales this year to help prevent another full-year loss. It has already announced the disposal of its container terminal assets in China Shipping Terminal Development (CSTD) to its parent, China Shipping Group.
The transaction is awaiting the final approval from the Ministry of Commerce, and is valued at CNY3,418 million ($697 million). CSCL expects to book a gain of CNY630 million ($129 million).
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