[161120.EN.SEA] Yang Ming Shrugs Off 11pc Volume Drop While Sailing Into Profitability In Q3

 

TAIWAN's Yang Ming Marine Transport Corp has returned to profitability in the third quarter, with higher rate levels taking the carrier's after-tax profit to US$91 million despite an 11 per cent decline in container volume.

It was the first profitable quarter reported by the Taiwanese carrier in over two years, and Yang Ming is expecting the trend to continue through the fourth quarter, putting the container line firmly on course for its first positive annual result since 2017.

Yang Ming follows Ocean Network Express in announcing a profitable third quarter, which is expected to be repeated by all the major carriers that Drewry has forecast are heading for a combined annual operating profit of $11 billion in 2020 - a level not seen in a decade. The analyst upgraded its expectation by 16 per cent following "meteoric third-quarter rate increases".

Market uncertainty caused by the COVID-19 pandemic dragged down Yang Ming's volumes by 10.99 per cent in the third quarter to 1.28 million TEU, to which the carrier responded by cutting capacity to match falling demand.

However, Yang Ming noted in an earnings statement that the lockdown restrictions that began to ease in mid-August led to the return of inventory restocking across supply chains in the US and Europe.

The rebounding demand, accelerated by a shift in consumer spending from services to goods, was accompanied by higher rates on the east-west trades, which allowed the carrier to report third-quarter revenue increasing 2.83 per cent year over year to $1.3 billion.

For the first three quarters of 2020, Yang Ming's revenue reached $3.53 billion, with volume at 3.66 million TEU. The carrier announced that its nine-month net profit had improved 155 percent over the same period last year to $62 million.

However, Yang Ming warned: "The outlook of container shipping still remains clouded in uncertainties over the possible comeback of the COVID-19 pandemic and US-China trade conflicts," adding that financial stability and steady profitability would be among its priorities for 2021, according to IHS Media.

Source : HKSG.