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Profit drops hit telcos, shipping and banks

We suggested earlier in the week that China Telecom was in search of higher profits with its purchase of 4 million third-generation (3G) mobile phones. Now, with the company’s first-half results released, we can understand that drive a bit better. China Telecom’s first-half profits fell nearly 29% year-on-year to US$1.32 billion due in part to marketing costs for its mobile services. First-half revenues rose to US$15 billion, up 14.13% year-on-year, but selling, general and administrative expenses outpaced them and rose 60% to US$2.57 billion. It’s also a dark Friday for China Cosco Holdings. The shipping company posted a US$672 million net loss in the first half, it second consecutive half in the red. Slumping world trade was to blame as Cosco’s container volumes fell 22% to 2.35 million twenty-foot equivalent units in the first half. The loss has put pressure on the company to cancel further orders for new container vessels after earlier canceling a US$299 million contract for eight dry-bulk ships and postponing the delivery of three others. Bank of China is faring better, with just a 2.5% drop in its first-half earnings. The bank will also slow its lending level in the second half of 2009; it expects borrowing demand to be lower.

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