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Sales may fall 44% at shipping giant

CHINA Shipping Development Co, the dry-bulk arm of the nation's second-biggest shipping group, expects sales to tumble 44 percent this year as a slowing economy saps demand for raw materials.

Sales will likely drop to 9.83 billion yuan (US$1.4 billion) from 17.6 billion yuan last year, the Shanghai-based company said in a statement to the city's stock exchange yesterday. That's lower than all 18 analyst estimates compiled by Bloomberg News.

Dry-bulk shipping rates have fallen 83 percent from a record in May, as China's waning growth curbs demand for iron ore and coal. China Shipping Development has already agreed to price cuts of 39 percent for cargos equal to about two-thirds of its 2008 domestic dry-bulk volume.

The company expects operating costs to fall 39 percent this year to 6.81 billion yuan. It will sell 5 billion yuan of mid-term notes in the first half.

The shipping company plans to add 19 vessels this year, including 14 oil tankers and five dry-bulk ships. The company had a fleet of 167 ships as of December 31.

Net income rose 17 percent last year to 5.37 billion yuan after the company locked in domestic bulk rates at the beginning of the year. Shareholders will get a 0.30-yuan dividend per share.

The shipping line dropped 7.1 percent to HK$6.59 (85 US cents) in Hong Kong trading yesterday before the earnings announcement. It has lost 65 percent in the past year, compared with a 71-percent decline for China Cosco Holdings Co, the country's largest bulk-shipping line.


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