COSCO Shipping International (Singapore) sent six bulk carriers to the scrapyard in the first nine months of this year reducing its fleet to four Handymax carriers.
The decision was based on the expectation that based on the prevailing market conditions, any recovery in the dry bulk shipping segment will remain weak.
“Under such difficult market conditions and considering that the upkeep costs of the group’s dry bulk fleet will continue to increase, the group has scrapped 6 dry bulk carriers by the end of September 2017, ” the company said.
Smaller bulker fleet has seen the company’s dry bulk division post a net loss of SGD 4.1 million (USD 3.03 million) for the third quarter of this year and a net loss from continuing operations in dry bulk shipping and other businesses of SGD 23.9 million (USD 17.5 million) for the first nine months in 2017.
The group’s recorded net profit from discontinued operations stood at SGD 23.6 million in Q3 2017. This relates to the group’s shipyard business in China, which it has agreed to dispose of.
Overall, the group recorded a net profit attributable to equity holders of SGD 24.8 million in Q3 2017, a major rebound when compared to last year’s corresponding loss of SGD 102.3 million and a net loss of SGD 75 million for the nine-month period, 51% lower loss year-on-year.
In August 2017, the company’s shareholders approved its sale and purchase agreement with COSCO Shipping Heavy Industry which will result in disposing of its 51% equity interest in COSCO Shipyard Group; 50% equity interest in COSCO (Nantong) Shipyard and 39.1% equity interest in COSCO (Dalian) Shipyard for RMB 1,465,822,955 (USD 211.1 million). The transaction is expected to be completed by Q4 2017.
COSCO Shipping International said it was working to wrap up the proposed disposal “ as soon as possible.”
“The company intends to use the sale proceeds from the proposed disposal to fund future projects, which may include mergers and acquisitions, and for working capital requirements of the group. In this regard, the company’s management has commenced and is actively reviewing potential investment opportunities,” the company said.
The company added that it has moved forward with the proposed acquisition of a 40 % stake in Jakarta-based PT Ocean Global Shipping for USD 10.24 million.
PT. Ocean Global Shipping is engaged in logistic service, container canvassing and management, ship agency and chartering and bunkering.
What is more, COSCO Shipping International has made a voluntary cash offer for Cogent Holdings Limited (CHL), a public limited company incorporated in Singapore, specializing in logistics management services.