Operating Performance Improved Significantly with Clear and Firm Development Strategy COSCO SHIPPING Holdings Announces 2019 Annual Results

SHANGHAI, CHINA / ACCESSWIRE / March 31, 2020 / The leading integrated container shipping service provider, COSCO SHIPPING Holdings Co., Ltd. (“COSCO SHIPPING Holdings” or “the Company”) (SSE: 601919; HKEx: 1919) today announced its annual results for the twelve months ended 31 December 2019 (the “Period”).

In 2019, global economic and trade situation faced severe challenges. Economic growth had hit a new low since the financial crisis of 2008, and the demand growth in container shipping had slowed year-on-year.

However, in the face of challenges, COSCO SHIPPING Holdings adhered to the guiding principle, deeply facilitating various work including globalization, quality improvement, digitalization and end-to-end business development. The Company continued to improve quality and efficiency and realized synergies in various aspects, which significantly improved the Company’s operating performance compared with the same period of the previous year.

During the Period, according to Hong KongAccounting Conventions, the revenue of the Company reached RMB150.54 billion, up by 25.1% year-on-year. Operating profit amounted to RMB7.22 billion, up by 44.5%.The net profit attributable to equity holders of the Company amounted to RMB6.69 billion, representing a year-on-year increase of RMB5.46 billion or 443.9%, and the basic earnings per share amounted to RMB0.55per share.

The revenue of the Company’s container shipping business amounted to RMB14.48 billion, up by 26.1%. The Company’s container shipping business completed 25.74 million TEUs of bills of lading, representing an increase of 18.1% year-on-year, ifoncomparable basis, up by 2.7%. The container shipping business of the Company recorded revenue of RMB7.22 billion, up by 8.8%. COSCO SHIPPING Ports achieved a total throughput of 124 million TEUs in terminal business, representing a year-on-year increase of 5.5%.During the Period, Orient Overseas (International) Limited (OOIL), a subsidiary of the Company, completed the sale of LBCT LLC, which generated a one-time net income and achieved good shareholder returns.

During the Period, the Company’s cash flow from operating activities had a solid performance, with a net cash inflow of RMB 21.2 billion. Net cash inflow from investing activities amounted to RMB4.03 billion, and net cash outflow from financing activities amounted to RMB9.54 billion. As at 31 December 2019, cash and cash equivalents amounted to RMB49.76 billion, representing an increase of RMB16.56 billion or 49.9% as compared to the beginning of the Period.

Benefited from the significantly improved operating results and the approximately RMB7.7 billion raising through the A-share non-public offering in January 2019, the Company’s financial foundation has been further consolidated. As at 31 December 2019, total assets of the Company amounted to RMB262.22 billion, and total liabilities amounted to RMB193.1 billion. Total equity attributable to equity holders of the Company amountedto RMB35.36 billion, representing an increase of 12.47 billion year-on-year. Thenet debt to equity ratio was 101.54%, representing a significant decrease of 83.7 percent point as compared to the end of last year.

As at 31 December 2019, the Company’s container fleet had 507 vessels, with the total shipping capacity reached 2.97 million TEUs, representing a growth of 7.6% as compared to the end of 2018. The capacity scale continued to rank the third in the world. COSCO SHIPPING Ports, a subsidiary of the Company, operated 197 container berths in 36 ports worldwide with an annual designed handling capacity of 113 million TEUs.

On 10 March 2019, OOIL, a subsidiary of the Company, announced that ordered 5 vessels with 23,000 TEUs are estimated to be delivered in 2023 as planned. The move will fill the shipping capacity gap caused by the gradual withdrawal of unsuitable vessels in the future. After the delivery, OOCL will be able to independently form a complete loop in the Asia-Europe trade and provide more stable and highly efficient services for customers.

Release development potentialafterthe restructuring, anddeepen reform and innovation to improve market competitiveness

COSCO SHIPPING Holdings has completed the restructuring of major transactions since March 2016, divesting its dry bulk business and container leasing business. The Company’s strategy has transformed from “comprehensive shipping services” to “focusing on the development of container shipping service supply chain”. The main business development path became clearer.

Benefitedfromthe effective development strategy and efficient execution, the Company can quickly adapt to the changing macro environment, and properly respond to external challenges, presenting a sound development trend. In the four fiscal years (2016-2019) after the restructuring, the annual average level of China Container Freight Index (CCFI) trended flat, but the Company’s operating performance improved steadily, showing strong profitability and development potential.

 

2016

2017

2018

2019

CCFI

711

820

818

824

Net profit attributable to equity holders of the Company after deduction of non-recurring (billion)*

-7.1

1

0.2

1.6

Operatingcashflow(billion)

1.5

7.1

8.1

21.2

Equity attributable to equity holders of the Company (billion)

18.3

20.7

22.9

35.4

*According to China Mainland Accounting Standards, net profit data excludednon-recurring profit and loss

The Company completed the initial grant of Share Option Incentive Scheme in July 2019. The measure was important to the Company’s continuous deepening reform and innovation, which further improved the Company’s med to long term incentive plan, promoted the unification of operating management activities with shareholders’ interests, and played an important role in promoting the enhancement of corporate value and sustainable development.

Adhering to the globalization strategy, promoting the risk resistance capability

In 2019, based on maintaining the service advantages of the major east-west services, COSCO SHIPPING Holdings adhered to the globalization strategy and continued to increase its shipping capacity in emerging markets, non-China markets and regional markets, which was in line with the changes in the global economic and trade pattern. The cargo volume of the Company in emerging markets and non-China markets increased by 7.0% and 7.9% year-on-year respectively, much higher than the overall volume growth rate on the comparable basis(2.7%). The ratio of the Company’s non-China cargo volume to the total foreign trade volume (i.e. volume excluding China domestic routes) increased from 35.5% in 2018 to 37.0%. The Company further consolidated its foundation for global development and enhanced its ability to resist regional and periodic risks.

In respect of the terminal business, as the world’s leading ports operator, COSCO SHIPPING Ports, a subsidiary of the Company, actively optimized the global terminal network and improved the operation quality and service level of terminal companies in which it has controlling stakes. COSCO SHIPPING Ports Abu Dhabi Terminal successfully entered formal commercial operations and aims to become a major container gateway port and important hub in the Middle East. During the Period, COSCO SHIPPING Ports successfully acquired 60% equity interest in Chancay Terminal in Peru, which is the first terminal project in South America controlled by the company.

Promoting the digitalized development with conforming to the trend of information era

In July 2019, CargoSmart, the subsidiaries of COSCO SHIPPING Holdings announced the execution of Global Shipping Business Network (GSBN) services agreements with other maritime industry operators. Under these agreements, each signatory commits to establish the GSBN, a non-profit joint venture to accelerate the digital transformation of the shipping industry. In early 2020, the GSBN Shareholder Agreements were signed, GSBN will be formally established and put into operation after completing all the regulatory approval procedures. CargoSmart will provide technical solutions and platform operation services for GSBN.

COSCO SHIPPING Lines, a wholly-owned subsidiary, actively built its self-operated e-commerce platform. In 2019, at the domestic e-commerce platform, the cargo volume increased by 14% year-on-year, and the transaction volume exceeded RMB1.3 billion. The company’s foreign trade e-commerce business continued to expand and covered all foreign trade routes, with the total cargo volume year-on-year increase of 150%.

In the long term, the Company’s unremitting efforts in the digitalized field based on its core business will be conducive to improving the efficiency of internal management and customer service experience, so as to drive customer retention and loyalty.

Actively fulfilling social responsibilities and driving the sustainable development of the industry

In 2019, the Company continued to promote and use various advanced energy-saving and emission reduction technologies. With the Company’s fleet capacity growth of 7.6% in 2019, the annual fuel consumption volume of the Company reduced by 1.0% as compared with the volume in 2018.

In response to the new regulation on limiting sulphur emission implemented worldwide by International Maritime Organization (IMO) in 2020, the Company proactively studied and compared various solutions. At present, the Company has decided to use low-sulphur fuel that complies with the standards and install scrubbers on a small number of vessels to meet the requirement of the new regulation.

During the Period, the brand image and market recognition of the Company have been further enhanced. In July 2019, the Company was included in FORTUNE China 500, ranking the 75th in the list. In September 2019, the shares of the Company were selected as a constituent stock of the Hang Seng Corporate Sustainability Index Series for the second successive year. In January 2020, the Company won “Best Infrastructure and Public Utilities Stock Company Award” and the “Best Listed Company with Social Responsibility” for the second successive year in the Golden Hong Kong Stock Award, fully reflecting the Company’s benchmarking position and outstanding influence in the industry.

Since the beginning of 2020, facing the sudden outbreak of COVID-19, COSCO SHIPPING Holdings has actively fulfilled its social responsibilities and made every effort in the epidemic prevention and control. While effectively protecting the life, health and safety of its on-shore and off-shore employees and ensuring the smooth and orderly business operation, the Company coped with the difficult situation to give priority to ensure the transportation of supplies for epidemic prevention and the living in the epidemic areas by providing “Green Channel”, making outstanding contributions to the battle against the epidemic.

At the time when domestic confirmed cases reached a peak, many domestic and overseas partners and suppliers of COSCO SHIPPING Group offered support and assistance for epidemic prevention and control in China. Today, COSCO SHIPPING Group will also do its utmost to help other countries overcome difficulties and join hands to combat the epidemic.

On 16 March, a flight carrying anti-epidemic supplies, including 50,000 surgical masks and 200 protective suits, donated by COSCO SHIPPING Group set off from Shanghai Pudong International Airport to Liguria, Italy, with sincere wishes “Attraverso le Asperità Alle Stelle”.

On 19 March, COSCO SHIPPING Group donated a batch of medical supplies including 10,000 pairs of latex gloves, 500 sets of protective suits and 500 pairs of protective gogglesto Greek Shipping and Island Policy Ministry in a bid to assist the daily patrol and emergency response of the Greek Coast Guard.

On 26 March, 20,000 surgical masks donated by COSCO SHIPPING Group to Port of Antwerp successfully arrived in Belgium. The Antwerp Port Authorityexpressed gratitude to COSCO SHIPPING Group on the official website with an ancient Chinese saying “a drop of water in need, shall be thanked with a fountain of deed”, meaning that Belgium and China are closely connected by shipping despite the thousands of miles in between.

On 25 March, COSCO SHIPPING (North America) Co., Ltd. donated cash and medical supplies to Secaucus city government and Hackensack University Medical Center in New Jersey to support the local fight against the epidemic. The donation, including a total of USD35,000 in cash and 2,000 N95 masks, was delivered to Hackensack University Medical Center in a contactless way throughout the whole process to protect the front-line medical workers so that they can continue to save lives of the local people on the premise of ensuring their own safety.

Looking forward to 2020, the Company will pay close attention to challenges brought by COVID-19 to the global economy and shipping market. While boosting confidence, the Company will continue to focus on high-quality development, innovative development and coordinated development, and keenly grasp opportunities in the industry to continuously optimize the Company’s international development path in the fast-changing environment. In addition, the Company will initiatively integrate internal and external resources to enhance the core competitiveness of high-quality development and improve the ability to continuously serve customers worldwide.

In terms of high-quality development, the Company will firmly advance the global route network layout and the construction of the global terminal network in order to continuously improve service quality and customer experience. Meanwhile, the Company will continue to consolidate the advantages of low-cost development and strengthen cost control in key areas.

In terms of innovative development, the Company will comprehensively deepen enterprise reform and innovation, release development vitality, actively promote the construction of digital network and strengthen the capability of service integration to constantly improve management efficiency and customer experience.

In terms of coordinated development, the Company will deepen the mechanism of collaboration and integration and stick to the dual-brand operating mode. The Company will continue to promote industrial chain collaboration, especially the synergy between ports and shipping businesses.

In the future, COSCO SHIPPING Holdings will continuously endeavor to build the Company as a top-tier integrated container shipping service provider, to create value and returns for customers and shareholders, and achieve win-win and common development with all parties.

About COSCO SHIPPING Holdings Co., Ltd.

COSCO SHIPPING Holdings Co., Ltd. (“COSCO SHIPPING Holdings”, Stock Code: 1919.HK; 601919.SS) is the listed company controlled by China COSCO SHIPPING Corporation Limited. The Company was listed on the Hong Kong Stock Exchange in June 2005 and the Shanghai Stock Exchange in June 2007.

The Company focuses on container shipping and terminal operations. As of 31 December 2019, through its wholly-owned subsidiary, COSCO SHIPPING Lines and its holding subsidiary Oriental Overseas International, the Company operates a total fleet capacity of 507 ships and 2.97 million TEUs, ranking as the world’s third largest container shipping company. COSCO SHIPPING Ports, another controlled subsidiary of the Company, operates a total of 197 container berths in 36 ports around the world, with an annual design processing capacity of 113 million TEU. COSCO SHIPPING Holdings is committed to become a top-tier integrated container shipping service provider with its continuing efforts to build up a global network, improve operational quality, provide customers with services and create value for shareholders.

Media Enquiries
COSCO SHIPPING Holdings Company Limited
Xu Junjie / Dong Dai
Tel: (86) 021-6029 8620/ (86) 185 1617 9776
Email: investor@coscoshipping.com
PRChina Limited
Ray Sun / Jack Liu
Tel: (852) 2522 1838/ (852) 2522 1368
Email: rsun@prchina.com.hk/ zyliu@prchina.com.hk

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Document title: Operating Performance Improved Significantly with Clear and Firm Development Strategy COSCO SHIPPING Holdings Announces 2019 Annual Results

31/03/2020 Dissemination of a Marketing Press Release, transmitted by EQS Group.
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