Singamas Container, the world's second-largest container box manufacturer, saw its earnings sink 43 per cent to US$34.3 million last year after demand for containers plunged, although the company said a reduction in global container inventories should boost its business this year.
The firm will also benefit from the closure of its factories and that of its bigger competitor, China International Marine Containers, for two months during the Lunar New Year.
The market was plagued by overly optimistic estimates on trade growth, said Teo Siong Seng, the chairman of Singamas.
Overcapacity from 2012 saw the inventory of containers hit 1 million teu in the second quarter of last year.
"We are more optimistic about the market this year as new orders have pushed up the container [average selling] price to US$2,300 from below US$2,000 last year," Teo said.
The company's utilisation rate of its dry container factories has improved to 80 per cent from 55 per cent last year.
"The demand on containers would increase as exports from China is set to rise this year," said Eric Chan Tak-lok, an executive deputy general manager of corporate banking at China Citic Bank International.
The only overhang was the crisis in Ukraine and its impact on the economy of Europe, Chan said.
"The distressed liner companies tended to use old containers longer last year … as trade growth increases in light of the pickup in the US economy, the demand on container transportation will increase by 4 to 6 per cent this year," Teo said.
Last year, demand grew only 3 per cent, compared with 5 per cent expected by the market.
The delivery of new container vessels is expected to peak this year and next. There are 234 vessels equivalent to 1.65 million teu scheduled to be delivered this year and 222 vessels with 1.9 million teu expected next year.
The soft container demand and a fall in average selling prices resulted in the company's turnover declining 16.5 per cent to US$1.28 billion.
Earnings per share fell 43 per cent to 1.42 US cents. The company proposed a final dividend of 1 HK cent per share, against 2 HK cents a year earlier, raising the payout for the year to 4 HK cents, against 6 HK cents previously.
Singamas shares yesterday rose 1.14 per cent to HK$1.78.