Yang Ming held its 340th Board Meeting on November 13th, 2019 to approve its 2019 Q3 financial report.
Consolidated revenues for the third quarter totaled NTD 37.78 billion (USD 1.22 billion). Business volumes increased by 1.99% year-over-year to 1.44 million TEUs. Yang Ming’s net loss after tax for the third quarter was NTD 1.38 billion (USD 44.43 million). Year-to-date consolidated revenues increased by 9.59%, year-over-year, to NTD 113.26 billion (USD 3.65 billion), a year–over-year volume increase of 3.84% to 4.07 million TEUs. The net loss after tax for the first three quarters was NTD 3.32 billion (USD 106.89 million), an improvement of 50.19% year-over-year.
Yang Ming’s third quarter results were impacted by its strategic decision to not exercise options with respect to certain formerly chartered vessels. By opting out, the company incurred obligations under the charter parties, which were then recorded as potential impact as mandated by the International Financial Reporting Standards. The potential effect of the arrangement were estimated at NTD 1.39 billion (USD 44.75 million) and lowered Yang Ming’s third quarter results, which otherwise would have showed a profitable quarter. Nevertheless, Yang Ming’s cash flow and operations were not affected and the company continues to see encouraging results.
According to analyst firm, Alphaliner’s latest projections, annual capacity growth is forecast at 3.7% and global throughput growth for 2019 is estimated at only 2.5%, which suggests a softer market demand than was previously expected. Meanwhile, the container shipping market remains vulnerable to trade uncertainties and geopolitical tensions. It is unclear the extent of potential impact those tensions and uncertainties will have on demand. Despite unpredictable market conditions, Yang Ming has improved its volume and revenue largely due to the efforts of business strategy and competitiveness enhancements.
Looking ahead, the container shipping market will undoubtedly need to be prepared for continued world economic and trade volatility. However, based on the data collected by Alphaliner, the estimated market demand growth at 2.8% is moving closer to the capacity growth at 3.3% in 2020. Furthermore, the containership orderbook-to-fleet ratio has fallen to its lowest recorded level at 11%. In addition, due to the new IMO 2020 regulation that will enter into force next year, it is expected that the supply-demand gap will gradually narrow. Started last year, Yang Ming already redelivered thirteen of its high-cost chartered vessels and there will be another five next year, coupled with its future newly-built containerships, Yang Ming’s operating cost will be greatly optimized. Anticipating ongoing US-China trade disputes and a shift in the global supply chain, Yang Ming will continue to optimize its Intra-Asia service network. With the addition of a new member joining THE Alliance in the upcoming year, the partnership will be poised to significantly strengthen its service portfolio and increase its competitiveness. The partnership which has been extended for another ten years will provide customers with greater stability and long-term commitment in the future.
Source: Yang Ming