Hong Kong shipping giant Orient Overseas weathers US-China trade war, steers to US$139 million first-half profit

Hong Kong-based shipping giant Orient Overseas International on Monday report an interim net profit of US$138.9 million for the first half of 2019, swinging from a loss of US$10.3 million this time last year. Overall revenue for the company rose 6 per cent to US$3.3 billion in the first half of this year from US$3.1 billion in the same period last year.

The result allayed some concerns about the US-China trade war, which has been disrupting trans-Pacific trade and industry since US President Donald Trump first levied tariffs on Chinese goods in February 2018.

The company said higher revenue from its container shipping and logistics division, which swung from a loss of US$3.1 million in the first half last year to a profit of US$152.7 million this year, helped its bottom line. Profit at its property division, however, stood at US$53.8 million this year, down from US$61.7 million in the first half of 2018.

The company pointed to a rising Ebit margin in its shipping business as well as steady demand for container shipping services, despite the trade war uncertainty. Orient Overseas executives said the synergies achieved with parent company Cosco helped boost margins.

Michael Fitzgerald, Orient Overseas’ deputy chief financial officer, said the typically low-value items carried on the company’s ships might enjoy some immunity from tariffs. The largest single commodity shipped by Orient Overseas on its trans-Pacific routes is furniture and lighting products.

“Most of the items shipped by container are low-value items,” said Fitzgerald, adding that “tariffs probably wouldn’t affect people’s decision to purchase such items”, particularly when the US economy continues to do well.