Singamas Container Holdings Ltd, the world's second-biggest maker of boxes for shipping goods, cut staff by more than a third and slashed capacity as a slump in global trade reduced demand for containers.

The company reduced its workforce to 8,000, Chief Executive Officer Teo Siong Seng said in Hong Kong yesterday. Singamas shut plants and cut shifts so that operating capacity dropped to just 30 percent of 700,000 containers for the first quarter, he said.

About 10 percent of the world's containers are sitting empty, with most of them in China, Teo said.

"There may be a recovery in the second half but it will be a slow recovery," Teo said. Singamas in December said that the earliest its business could pick up was in the middle of the second quarter.

Singamas dropped 4.9 percent to close at 39 HK cents in Hong Kong trading. The stock is down 18 percent this year, compared with a 21-percent decline of the benchmark Hang Seng Index.

Singamas has received more orders from clients this month, with deliveries to be made in the second quarter, the company also said yesterday. Part of the reason for the lower capacity in the first quarter was because of the Lunar New Year holidays in January, the company said.

The company, which has a global market share of 23 percent, last week announced a plan to raise HK$492 million (US$63 million) from a rights offer. The offer will help lower net gearing, the ratio of debt to equity, to 86 percent from about 140 percent based on its first-half earnings, Chief Financial Officer Sylvia Tam said.

"We want to keep our debt level low and will use the proceeds from the offering to pay back our long-term debt," Teo said. "Our short-term debt level has come down a lot."

The container maker is to offer investors two new shares for every one held at 35 Hong Kong cents. DBS Asia Capital Ltd is underwriting the offer. Strategic Times Ltd, a unit of Singamas's controlling shareholder, Pacific International Lines (Private) Ltd, is acting as sub-underwriter for about 75 percent of the offer.

China International Marine Containers Co is the world's largest maker of boxes for freight.

(Shanghai Daily March 10, 2009)