Thanks to its strong container shipping business.
According to Nomura, OOIL reported its FY12 results with net profit increasing 63% y-y to USD296mn. Pre-exceptional profit increased 107% y-y to USD287mn.
This was 14% below Nomura's forecasted pre-exceptional profit of USD334mn and 8% higher than consensus of USD265mn.
The surprise to our estimates was due to (1) higher-than-expected operating costs and (2) higher interest expense.
The significant earnings improvement in 2012 was mainly attributable to the container shipping business, which recorded a 7% y-y growth in revenue to USD5.9bn.
This was mainly driven by (1) higher freight rates (+3% y-y to USD1,131/TEU) and (2) increasing volumes (+4% y-y to 5.2mn TEUs). During 2012, the overall container and logistics business recorded an EBIT margin of 3.6% (vs. 2.0% in FY11).
2H11 pre-exceptional profit of USD232mn was significantly better than 1H11 pre-exceptional profit of USD55mn.
The improvement was due to better earnings from container shipping business (+3% h-h in average 2H12 freight rates and +2% h-h in 2H12 volumes handled).
We believe the majority of 2H12’s profitability came from 3Q12, as average 4Q12 freight rates (from Shanghai Shipping Exchange) were 12% lower q-q.
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