COVID-19-related health and safety screenings at Chinese ports have resulted in a sharp hit to China Ocean Group Development’s revenue and profit.
The distant-water fishing company, which has offices in Hong Kong and Shenzhen and is listed on the Hong Kong Stock Exchange, recorded HKD 243 million (USD 31.5 million, EUR 29.1 million) in revenue in Q3 2021, as compared to approximately HKD 475.6 million (USD 61.7 million, EUR 57 million) for the corresponding period in 2020. The company said the drop was due to “the relevant anti-epidemic measures, including but not limited to, the increased hygiene and sanitary inspections, especially for aquatic and food products at the ports in mainland China.”
China Ocean Group Development’s losses widened to HKD 17.7 million (USD 2.3 million, EUR 2.1 million) in the quarter, as compared to a loss of approximately HKD 5.4 million (USD 700,000, EUR 640,000) in the corresponding period in 2020.
Longer customs clearance times are reducing the company’s order book, according to China Ocean’s Q3 financial release. The company reported zero earnings from its fishing operations in the quarter, which it said was related to travel difficulties preventing Chinese officials from conducting inspections of the company’s distant-water vessels, a requirement for all Chinese distant-water licenses. However, other Chinese distant-water fishing firms appears to have been able to renew licenses.
In January 2022, China Ocean Group announced it was issuing HKD 98 million (USD 12.5 million, EUR 11.1 million) worth of new shares – 16.1 percent stake of the company’s total issued share capital-to pay off loans and get its vessels operational again.
The company has projected a positive vision for its future, as it said distant-water fishery catches are more profitable than distribution of imported or locally sourced seafood. China Ocean Group Development’s is diversified in the fact that its own fleet as well as a distribution business in China.
“Gross profit margin of aquatic products from fishing operation were generally higher than from supply-chain operation,” it said.
Photo courtesy of China Ocean Group Development
