Yang Ming has seen weaker container business earnings in the first quarter than was expected due to the impact of Covid-19 crisis and Lunar New Year.
The Taiwan-based company has reported on 14 May total consolidated revenues of US$1.15 billion in Q1, translated to a minor 1% decrease compared to the same period of 2019, while the company’s net loss, after tax, was US$27.15 million.
At the 346th board meeting on 13 May, where Yang Ming approved its 2020 Q1 financial report, the liner company stated that “the first-quarter result was impacted by the recognition of loss from part of the group’s subsidiaries, including bulk business, in the amount around US$10.95 million.”
YM said that Q1 container volumes decreased 4% year over year to 1.24 million TEU, while fuel costs increased 5%, compared to 2019, due to the implementation of International Maritime Organization (IMO) 2020 fuel regulations.
Ocean freight, however, increased 4% over the same period last year and revenue slightly declined 0.32% year over year. “This indicates the company’s business strategy and competitiveness enhancements are effective and keep the revenue at around the same level compared with last year,” commented YM.
The Keelung-based carrier has forecast reduced revenues due to large scale capacity withdrawal in Q2, but “related variable or semi-variable costs could also be lowered,” it said. In any case, as the coronavirus pandemic continues to rage, Yang Ming has implemented a blank sailing plan in the second quarter to handle the demand crisis.
Meanwhile, according to the latest analyst’s report dated 14 April 2020, Taiwan Ratings Corps maintained its ‘twBBB’ long-term and ‘twA-2’ short-term credit ratings on Yang Ming. The credit rating agency considers Yang Ming’s role and link to the government will remain intact and the company will continue to benefit from favorable borrowing costs and sufficient liquidity support from banks in Taiwan.
It is important for Yang Ming that its liquidity and refinancing risks remain low despite the Covid-19 impact. The shipping company added that the Taiwanese government seems willing to support the shipping industry to fight the pandemic impact with several economy stimulus or bailout packages.