Cosco Q2 net profit slides 30% amid expansion drive in Malaysia

MAINBOARD-LISTED Cosco Shipping International (Singapore) on Tuesday announced its second-quarter net profit fell 30 per cent to S$1.7 million, alongside a new appointment and acquisitions.

Revenue for the quarter rose 3 per cent to S$41.2 million, driven by its logistics and shipping segments, but was outpaced by cost of sales, which increased 6 per cent to S$31.4 million.

Earnings per share were 0.08 Singapore cent, down from 0.11 cent for the same period a year ago.

For the half-year, Cosco's net profit sank 12 per cent to S$4.6 million.

Revenue dipped 1 per cent to S$80.2 million while cost of sales went up 2 per cent to S$61.5 million. The drag came from its ship repair and marine engineering segment, Cosco said.

For the period, earnings per share were 0.21 Singapore cent, lower than the 0.24 cent in the previous year.

In spite of the lower profit, Cosco on Tuesday separately announced a few acquisitions in a bid to expand its operations in Malaysia. For one, Cosco intends to take majority stakes in Guper Integrated Logistics, Gem Logistics, Dolphin Shipping Agency and East West Freight Services for a total sum of RM88 million (S$29.1 million).

The first three companies are subsidiaries of Complete Logistic Services Berhad, a company listed on Bursa Malaysia. East West Freight Services provides freight, warehousing and forwarding agency services.

The companies have good track records, a strong customer base and highly experienced management teams, which are "not only complementary to the company's current business operations", said Cosco, but are also "potentially synergistic between themselves and with the other components of the company's logistic businesses in Malaysia".

In addition, Cosco's unit, Cogent Malaysia, is in talks with Golden Logistics, a unit of Cosco Shipping (South-east Asia), to finalise the acquisition of certain assets. The purchase is expected to cost between RM8 million and RM10 million.

On its plan to obtain a lease for a piece of land in the port area of Port Klang where it will construct a 300,000 square foot warehouse, Cosco said Cogent Malaysia is in discussion with Westports Malaysia to "firm up the lease". The plan had been announced in April.

On Tuesday, Cosco also announced that Wang Yu Hang, its non-independent non-executive director, has resigned due to "other personal commitments".

Mr Wang had also been chairman of the board. Another board member, Gu Jing Song, will replace him as chairman.

Cosco shares closed down 3.45 per cent or S$0.01 at S$0.28 on Tuesday before the announcements.