Chinese port operator and container leasing firm will cut capital expenditure
Cosco Pacific said on Wednesday it will cut capital spending and defer uncommitted projects and expansion of existing terminals amid a global financial crisis, boosting its stock nearly 14 percent.
The Chinese port operator and container leasing firm will cut capital expenditure in the fourth quarter and next year to control cash outflows and strengthen its balance sheet, Winnie Fan, senior investor relations manager, told Reuters. She would not give the new target for capital expenditure.
Controlled by the country's top shipping conglomerate, COSCO's listing flagship China COSCO, the firm had earlier planned to spend $480 million on port expansion and $460 million on the purchase of new containers this year.
"We will adjust our asset and capital structure in response to the fast-changing climate so as to maintain the most prudent capital structure and financial health," the company said in a statement on Wednesday.
COSCO Pacific's shares jumped 7 percent after the news, extending their gain to 13.6 percent at the close. They beat a 0.84 percent rise on the benchmark Hang Seng Index .HSI.
The company also said it was not involved in any speculation, leverage or structured foreign exchange products, such as accumulators, after a series of companies reported heavy investment losses recently that spooked the market.
It posted a net profit of $77.6 million for the three months ended September, down 17.4 percent from the same period in 2007. But its net profit would have risen 17 percent if it stripped out the impact of a fair value gain of the China International Marine Containers 000039.SZ put potions in the year-ago period.