Singapore-listed Yangzijiang Shipbuilding (Holdings) Limited reported a 16% dip in net profit compared to the same period a year earlier, despite a 10% rise in revenue driven mostly by new orders for 12 vessels, including the recently won contract for two 84,000 cbm very large gas carriers (VLGCs) ordered by Shanghai Zhenrong Energy.
The company reported CNY 680.7 (USD 107.4 million) net profit attributable to shareholders for the three months ended September, as compared to CNY 811.2 recorded in 3Q2014. The slide in net profit was attributed to a higher proportion of the revenue recognized during the quarter coming from vessels with lower profit margins.
Total revenue increased from CNY 3.7 billion to CNY 4.1 billion year-on-year, with the company’s shipbuilding related segment remaining the core revenue driver, contributing about CNY 3.8 billion, or 91.3% to the overall revenue.
The 12 new shipbuilding orders received in 3Q2015 brought the company USD 730 million in revenue. Apart from the two VLGCs, the orders include four 11,800 TEU container ships ordered by Pacific International Lines (PIL), four 3,800 TEU boxships for Hamburg Sud and two 1,900 TEU ships for Rickmers Group.
In addition, the four 9,700 TEU boxships announced in August 2015 have each been changed to 11,800 TEU, accompanied by increments in contract value.
”The Group has continued to see a healthy flow of new orders amid the weak market. As at 30 September 2015, the Group had an outstanding order book of USD4.8 billion, comprising 107 vessels. The delivery of the outstanding order book is scheduled to optimize the use of yards’ facilities up to 2018,” Yangzijiang said in its report.
”The oversupply situation for container ships and dry bulkers is expected to continue, and the competition on the market has intensified,” said Ren Yuanlin. Executive Chairman of Yangzijiang Shipbuilding (Holdings) Ltd.
”Facing the tough environment, we have become more flexible in profit margin requirement and payment terms. We believe this is the optimal strategy given the situation, and it has proved effective in stimulating order flow since we adopted it. While the demand growth for traditional vessels has slowed down, demand for high-technology, more sophisticated and green vessels has become more promising. We have included LNG Carriers and VLGC in the product line, and these high value-added vessel types are expected to provide crucial support for our sustained growth.”