(Adds chairman comments and share price)
By Joanne Chiu
HONG KONG, Dec 3 (Reuters) - Hong Kong-based container ship operator Orient Overseas (International) Ltd (OOIL) (0316.HK) says the outlook for the industry next year is grim due to overcapacity and weak demand, as a global financial crisis dampens trade.
“The outlook is very pessimistic next year,” Chairman Tung Chee Chen told Reuters on the sidelines of the Clinton Global Initiative Conference in Hong Kong on Wednesday.
The market was bad due to the global economic downturn, but OOIL would still take delivery of 10 new ships scheduled for next year, mostly at the end of 2009, he added.
Analysts say international shipping rates are still low and will not see a cyclical upcycle yet.
Many shipping firms will fall into the red in 2009, Credit Suisse said in a research report this week.
It forecast OOIL will post a net profit of $201 million in 2008 but will make a loss of $63 million in 2009.
Tung said OOIL might see higher revenues next year due to higher capacity, but its profit was likely to fall from 2008 due to weak demand.
“The only solution is to fight for some high value cargoes and don’t slash prices for volume,” he said at the .
Tung said any recovery in the industry would depend on the performance of the global economy.
OOIL reported a disappointing 93 percent drop in interim net profit to $158.3 million on fuel cost hikes and the consequence of more than $2 billion in asset sales 1a year earlier.
Stocks in the sector have been battered, with shares in OOIL plunging 78 percent so far this year, underperforming a 51 percent drop in the benchmark index .HSI.
Credit Suisse said some shipping stocks could rebound in the second quarter of 2009 or even the later part of first quarter.
“We like OOIL and CSCL (2866.HK) due to very depressed valuations, solid balance sheets and recent underperformance,” it added.
OOIL shares jumped 7.2 percent to close at HK$12.5 on Wednesday after oil prices fell nearly 5 percent overnight to below $47 a barrel. (Editing by Anne Marie Roantree)