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Singamas – lower net profit
World's second-largest container manufacturer publishes annual report
Hong Kong-listed Singamas Container Holdings, the world’s second-largest container manufacturer and controlled by Singapore’s Pacific International Lines, reported a net profit of $32.9m for 2014, down from $39.3m the year before.
The decline was contributed by a one-off gain of $9.8m for 2013, and the lower selling price of containers, according to the company’s annual report.
While total sales grew 26% to 683,007 teu last year, revenue increased 20.9% year-on-year to $1.5bn, thanks to the solid US economic recovery, more deliveries of large boxships and the need for replacement containers.
Operating margins narrowed as the average selling price of the company’s main product the standard 20ft dry freight container dropped to $2,086 from $2,195 in 2013.
“The drop reflected the decline in raw material prices, particularly the corten steel price,” the report said.
The company’s specialised containers business raised its revenue contribution to 29.4% versus 26.3% the year before, after expanding its stakes during 2014 in Modex Group, which specialises in the manufacturing, trading and leasing of offshore containers.
The increased shareholdings from 26% to 28.5% resulted in $794,000 after-tax losses to Singamas. But the company expected its container-leasing business to generate more earnings for 2015, as offshore firms, being blighted by low oil prices, would have less money to buy new boxes.
Modex Group currently has around 13,900 units of offshore containers, with a leasing utilisation rate around 70%.
In addition, “there are several positive developments that suggest the new financial year will present greater opportunities for the container industry”, said Singamas.
“The replacement cycle of old containers will gather pace as the performance of shipping companies stabilises. Yet another potential stimulus is the decline in the price of petroleum during 2014, which in turn has freed up capital for shipping companies to acquire more containers,” it added.
Singamas’ logistics segment, which only accounted for 2% of the company’s total revenue last year, has also seen the opportunity to further expand its income sources.
It has boarded China’s Seaborne Silk Road lately, with a potential investment in Guangxi province, which neighbours Vietnam in Southeast Asia.
The company has entered into a framework agreement with Guangxi Beibu Gulf International Port Group, in the hope of a future co-operation in container manufacturing and cold chain logistics business.
“We believe this investment project holds potential growth of the group’s logistic business going forward,” Singamas said.