Cosco Corp Close to Red

Singapore-listed offshore marine engineering, shipbuilding, ship repair & conversion and dry bulk shipping group Cosco Corporation (Singapore) Limited reported a SGD 991 million (USD 748 million) turnover for the quarter ending March 31, 2015, a 5% dip compared to the same period a year before, triggered by a decrease in shipyard and dry bulk shipping revenues.

The company’s turnover from shipyard operations dropped 5% to SGD 981 million due to lower revenue contributions from marine engineering and ship repair business, while the turnover from dry bulk shipping and other businesses fell 12% to SGD 10 million on lower charter rates.

Cosco’s gross profit decreased 24% to SGD 73m on lower profit contributions from dry bulk shipping and shipyard operations, while the net profit attributable to equity holders decreased 94% to SGD 0.8m as operating conditions continued to deteriorate.

”The persistent industry slowdown continued to put tremendous pressure on our performance in Q1 2015,” Captain Wu Zi Heng, Cosco Vice Chairman and President, said.

”Against such headwind, our Group continued to step up our efforts in contract negotiations and managed to secure new orders in Q1 2015 which include 73 container vessels, 1 shuttle tanker and 1 module carrier. As at 31 March 2015, our order book stood at USD 8.1 billion with progressive deliveries up to 2017.”

As Cosco continues construction in 2015 on new ship building contracts that were secured in recent years at low contract values due to the slumping shipping market then, it expects operating margins on these new shipbuilding projects to continue to be under great pressure notwithstanding improving gains in efficiency and productivity.

Amidst weakness in the state of the global economy, Cosco expects difficult and challenging business and operating conditions to persist in 2015.