Cosco net profit sinks 24.3% to $105.7m despite booming shipyard operations

Bottomline bleeding due to rising distribution costs.

Cosco Corporation revealed in its unaudited full-year results for FY 2012 that gross profit increased 27.3% from $380.8 million in 2011 to $484.9 million in 2012 mainly due to higher profit contributions from shipyard operations.  

But this impressive performance was offset by a decrease in other income by 43.9% to $122.6 million in 2012 mainly due to lower sale value of scrap materials and a one-off compensation received from customers in FY 2011. Other income is comprised of gains from the disposal of scrap metal, interest income, net currency exchange gain/(loss) and others.

Distribution costs also rose by 28.5% to $82.3 million mainly due to additional marketing and promotional activities.

Meanwhile, interest expense increased by 114.0% to $99.9 million in 2012 due to higher bank borrowings deployed to fund shipyard operations.

These caused Cosco Corporation's net profit attributable to equity holders to decrease 24.3% from $139.7 million in 2011 to $105.7 million in 2012.