Newbuilding market woes hit Rongsheng as profits plunge 82% in H1
Shipbuilder China Rongsheng Heavy Industries Group's struggle to get new orders while also being stuck with completed vessels took its toll on its first half bottomline as it warned last month, Seatrade Asia online reports.
Revenue dropped by just over a third to RMB5,46bn from RMB8.70bn previously while net profit plunged 82% to RMB215.8m from RMB1.22bn in the previous corresponding period.
Revenue from the mainstay shipbuilding segment fell 38% to RMB5.21bn from RMB8.44bn previously as Rongsheng received just two bulker orders amounting to 152,000 DWT worth a total contract value of $55.6m during the period. The group's current order book stands at $5.88bn for 101 vessels and runs till 2015.
Inventories swelled 28% to RMB3.34bn in the first half from RMB2.61bn as at Dec 31, 2011. Receivables rose 22% to RMB4.38bn from RMB3.60bn at the end of the preceding half year while turnover days nearly tripled to 133 days from 45 days. This was "primarily due to the significant increase of completion percentage of vessels under construction for the period, the continuing downtrend in global shipbuilding industry and our agreement to extend credit terms to shipowners considering our While the outlook is not good the board has however given assurance that it believes Rongsheng can continue as a going concern for at least the next twelve months.long-term cooperation with the shipowners and the substantial completion of the main bodies of the related vessels", Rongsheng said in its stock market announcement. "Going forward, we are determined to monitor trade receivables closely," it promised.
While the outlook is not good the board has however given assurance that it believes Rongsheng can continue as a going concern for at least the next twelve months.