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The world’s largest manufacturer of shipping containers, China International Marine Containers (CIMC), today issued a profit warning to investors, predicting a significant loss for the first half of the year.

The group, which is listed on the Hong Kong Stock Exchange, issued a statement to investors, warning them to expect a loss of Rmb450m ($67.4m) for the first six months of 2016.

This compares with the Rmb1.52bn profit recorded during the same period of 2015 – a decline of some 70%.

It blames the slowdown in global trade, which has led to declining demand for new boxes, as well as increased volatility in the Rmb-$ exchange rate.

CIMC said: “During the first half of 2016, there was a slowdown of China’s economic growth, continuous weak demand from external economies, continuous downturn of international trade and export and increased fluctuation in RMB.

“Although the group has implemented various measures for active response, the operating results during the reporting period are expected to still record a substantial decline.”

And it appears unlikely that revenues in the second half will do much in mitigation, after CIMC also revealed that some 77% of its 2015 profits were made in the first six months.

As a result of the considerable weakness of demand for containers –  the bulk of its business– the group confirmed that it has abandoned a deal to acquire the offshore construction unit of Sinopacific Shipbuilding, claiming its assets had been overvalued.

It has however, been looking to diversify its business in other areas recently and, at the beginning of this month, its semi-trailer manufacturing arm, CIMC Vehicles, acquired UK manufacturer Retlan for £92m – a way of increasing its geographic spread and reach into supplying the road freight market.

The UK semi-trailer maker, headquartered in Northern Ireland, with manufacturing plants there and Nottinghamshire, comprises the SDC Trailer and MDF Engineering brands. It saw revenue of £198m and profit of £14m in the latest financial year, and was sold after the family with a controlling stake decided it wanted an exit.

CIMC said the acquisition would  “triangulate” its European semi-trailer production with plants in Poland and Belgium, after an attempt to set up a plant in southern Germany was abandoned.

It added that the deal had been “unaffected” by Brexit worries.

“CIMC’s resolution to seek business growth and expansion in Europe will not be shattered by Brexit, but it may make necessary strategic adjustments and adapt to local customers’ demands with more accurate market strategies.

“Previously, a standalone company may serve a larger area in Europe featuring regional market integration, but in the future, the European markets may become more differentiated,” it said.

CIMC Vehicles general manager Li Guiping added that geographical diversification was also about minimising exchange rate fluctuation risks.

“Even if the British pound depreciates by 10%, it is in our hands. To some extent, the depreciation will benefit export sales of the UK-based company to other European countries, North Africa, and the Middle East,” he said.

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