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2000
Overview
The Marine Services Division, through Swire Pacific Offshore,
operates a fleet of specialist vessels supporting the offshore oil industry.
The division also has interests, through jointly controlled and associated
companies, in ship repair and harbour towage services in Hong Kong and
overseas, and in container terminal operations in Hong Kong and Mainland
China.
The division's contribution to the group's attributable profit in 2000
amounted to HK$501 million, compared with HK$472 million in 1999: an increase
of 6.1%. This result reflected the improvement seen in the offshore oil
support market through both increased charter rates and better asset utilisation,
and improved throughput at the container terminals.
Offshore oil support
Swire Pacific Offshore provides marine support to the offshore oil
industry with a fleet of 44 vessels, with six additional boats in an Egyptian
associate company, Ocean Marine Services Limited.
Demand for offshore oil services increased in 2000 as higher oil prices
led to more offshore oil exploration. Swire Pacific Offshore reported
an attributable profit of HK$170 million, compared with HK$175 million
in 1999: a decrease of 2.9%. Projections of future rig numbers and utilisation
indicate a substantial increase in demand for anchor handling tug supply
(AHTS) vessels. In line with the expanding market, Swire Pacific Offshore
has signed a contract with Brevik Construction of Norway for the building
of four new UT-710 10,800 BHP AHTS vessels for delivery in 2002 and 2003.
The group has also converted two options for UT-738 vessels to firm orders,
with delivery in 2002.
Expro Swire Production Limited, a 50% owned jointly controlled company
of the group, has been awarded a contract for the supply and operation
of an early production facility by Shell Exploration BV, on behalf of
the National Iranian Oil Company. This facility will be used to produce
100,000 barrels of crude oil per day commencing in August 2001.
Ship repair, land engineering and
harbour towage
In April 2000, Hongkong United Dockyards purchased the business of
Hongkong Salvage & Towage, effectively merging the operations of the two
companies and achieving cost savings.
Hongkong United Dockyards provides ship repair, land-based engineering
and automotive services from its facility based on Tsing Yi island. Continuing
pressure on rates and strong competition from Mainland China still have
a significant impact on the earnings and margins of the dockyard. Some
improvement in demand has led to an improvement in forward bookings and
utilisation rates. Firm bookings with container owners have been augmented
by the return of dredgers to Hong Kong harbour, and the continuing increase
in outsourcing by the Government Dockyard.
Land engineering activities were quiet during 2000 but there has been
a significant improvement in confirmed orders for 2001. Margins are also
expected to improve as Hong Kong's infrastructure workload gathers pace.
New automotive services include bus painting, the Volvo authorised service
workshop and an environmental department for the testing and control of
exhaust emissions. Start-up and development costs are being incurred,
but these new activities will soon show a measurable and growing benefit
to the company.
Hongkong Salvage & Towage maintains its position as the largest operator
of tugs in Hong Kong harbour, with a fleet of 12 deployed locally. Two
newbuildings, the Peng Chau and Shek Chau, were delivered
during the year, and the Tai O was sold in October. Eight other
tugs are currently operating overseas. The company also operates six shallow
draft container vessels in Hong Kong.
Container terminals
Modern Terminals recorded a strong performance during 2000. The company
achieved increased throughput of over 3 million TEU, mainly from Maersk
Sealand and new South American services, and saw a small increase in market
share.
Continuing competition from terminals in Mainland China may have an
adverse impact on the current Hong Kong rates and, with limited opportunity
to expand further in Hong Kong, further improvements in operating performance
must lie with productivity enhancements.
At Shekou Container Terminals throughput continued to increase in 2000
to over 700,000 TEU, which led to an increase in operating profits. The
company is now approaching full capacity; the project to develop two more
berths continues to be examined by the relevant government agencies in
Beijing and formal approval is expected in 2001.
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