Chairman’s Message
Extracted from Annual Report 2008
Dear Shareholders,
2008 — A Year of Strength
2008 was an extraordinary year for COSCO
Corporation. With steadfast management, we
sailed the COSCO ship on an even keel amidst
challenging economic conditions.
For the year under review, we booked a strong
increase of revenues by 54% to $3.5 billion.
Gross profit grew 3% to $630.1 million in FY2008
while net profit attributable to equity holders was
booked at $302.6 million, a decrease of 10%,
year on year, due to allowance for impairment of
trade and other receivables made in light of the
adverse global economic climate and the higher
costs incurred in ship building and offshore marine
engineering projects. Earnings per share (diluted)
amounted to 13.50 cents per share. I am pleased
to report that the Board has recommended a first
and final dividend of 7.0 cents for the FY2008
which comprises ordinary dividend of 4.0 cents
per share and a special dividend of 3.0 cents per
ordinary share. We have strived to maintain the
same dividend payout despite the challenges in the current economic climate as we firmly believe the
future prospects for COSCO Corporation remain
bright and are confident of our strong financial
position. Meanwhile, our shares continue to be one
of the most liquid actively traded counters on the
local bourse, which is a testimony of shareholder
interest.
Milestones
In FY2008, we showed operational agility
and strategic acumen that underscored our
development during the year. We expanded
our shipyard capacity, further established a
solid presence in offshore marine engineering,
progressing to more technically sophisticated
marine engineering projects, such as Sevan 650
ordered by Norwegian marine company Sevan
Marine ASA. In July, we successfully delivered our
first FSO project to a Japanese customer whose
expectations on the technical and commercial
standards of the unit were both met by our
shipyard. These milestones of the past year are a
true reflection of our innate strength and capabilities
that will enable our Group’s further expansion.
Co-ordinated Government Efforts
On the wider horizon, in the face of gloomy
economic news, various major financial institutions
and corporations are being bailed out by their
national governments to prevent their respective
economies from further deterioration. The Baltic
Dry Index (BDI), a measurement of global freight
rates and a leading economic indicator of global
economic prospects, elicits signs of recovery from
a precipitous low last December. Meanwhile, the
Chinese, Japanese, European, and American
governments have passed large fiscal stimulus
packages. The US Administration recently enacted
in February 2009 a record US$787 billion stimulus
package aimed at reviving the American economy.
It is reassuring that the governments of all major
economies are keenly aware that co-ordinated,
concrete efforts are essential to adequately
address the weakened world economy.
Sustainable Development in COSCO
Despite the challenging external environment, I remain confident in the healthy, sustainable and
sound development of all business sectors of
COSCO Corporation and in particular, I foresee that
our shipyards will remain busy. As at 31 December
2008, our order book stands at US$7.3 billion with
progressive deliveries to the first half of 2012.
Financially, we remain strong, with a healthy
balance sheet of increased assets and sizeable
cash position. The moderating business climate
might actually create attractive opportunities for
strategic restructuring. We firmly believe in the
importance of creating and nurturing competitive
advantages and understand that effective strategic
positioning will anchor our business and secure
our future.
The long term outlook for our business remains
bright. Our COSCO Shipyard Group, which
oversees six major shipyards in China, is operating
at a brisk pace and has reinforced its strong
commitment to steer our business forward.
According to the International Energy Agency
(IEA) World Energy Outlook 2008 report, energy
demands for oil are projected to grow as
economic giants China, India, Brazil, Mexico and
other populous countries continue their long term
development trajectory.
These developments augur well for our offshore
marine engineering activities, as there will be
demand for oil rigs to tap new, far flung sources of
oil. Shipping, likewise, will continue to play a vital
role in the infrastructure of the global economy
and commerce. In consequence, the demand for
new ships and ship repair will also continue.
Conclusion
COSCO Corporation continues to enjoy the
confidence and support of the wider COSCO
Group in general and the parent company in
particular. In meeting the challenges ahead,
COSCO Corporation would be able to call on the
formidable resources of the COSCO Group. This is a distinct and competitive advantage in today’s
environment.
On behalf of the Board of Directors, I welcome on
board Mr Jiang Li Jun as our new Vice Chairman
and President. With his 34 years of experience in the
shipping industry and over 10 years of experience
in the management of listed companies, we look
forward to his wise and capable leadership.
Finally, I would like to thank the directors for their
devotion and advice and I applaud the outstanding
efforts made by our staff. To our loyal shareholders,
my heartfelt gratitude for your confidence and
continued support. Though we are unsure how
long this global recession will last, I assure you that
together, we will rise to the challenges ahead.
Li Jian Hong
Chairman
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