Cosco Corp profits fall after USD 40 million provision
Lloyd List reported that COSCO Corp’s annual profits dropped 10% after it took a USD 61 million provision following requests for shipbuilding payment delays by several shipowners.
Cosco Corp which owns 51% of Cosco Shipyard Group said in a statement on its full year financial results that “In light of the adverse global economic climate, the group made provisions for impairment of trade and other receivables of USD 61.3 million as the shipping industry faces deteriorating market conditions, and amidst requests for payment delays by several ship owners.”
As a result, the Singapore listed arm of the Chinese shipping giant said that net profits for last year were USD 302.6 million, 10% lower than for 2007. Revenues jumped 54%YoY to hit USD 3.5 million last year. The provisions have pushed the Singapore Company into the red for the fourth quarter, with full-year profit of USD 24 million lower than its nine-month profit figure for the period ending September 30th 2008.
Cosco Corp did not give a quarter by quarter breakdown for the last three months of 2008. CSG has had close to one-fifth of its order book of just over 100 new buildings either delayed or cancelled. The Chinese shipbuilder has now agreed to delivery delays for 16 bulkers and accepted cancellations for a further four.
The shipyard group was also hit by higher operational costs and expected USD 89 million in losses to be recognized on construction contracts. Cosco said that the losses stemmed from higher steel costs between the time the vessels were ordered and the time the orders for steel were placed. It also blamed higher outsourcing costs and tighter pre-delivery inspections by owners. Cosco Corp, which is also involved in dry bulk ship owning and operation, warned that it was facing an uncertain outlook.
The Singapore Company said “The market is likely to deteriorate further before it recovers. This is expected to result in fewer new shipbuilding and offshore marine engineering contracts. Despite the cancellations and delays the shipyard group still has an order book of USD 7.3 billion with deliveries through to 2012.”
Mr Jiang Li Jung Cosco vice-chairman said “Our group will stay focused on improving our operational efficiencies by scaling the technology learning curve and leveraging on our land and labor comparative cost advantage as we gain further experience and momentum in our diversified business.”
Cosco Corp which owns 51% of Cosco Shipyard Group said in a statement on its full year financial results that “In light of the adverse global economic climate, the group made provisions for impairment of trade and other receivables of USD 61.3 million as the shipping industry faces deteriorating market conditions, and amidst requests for payment delays by several ship owners.”
As a result, the Singapore listed arm of the Chinese shipping giant said that net profits for last year were USD 302.6 million, 10% lower than for 2007. Revenues jumped 54%YoY to hit USD 3.5 million last year. The provisions have pushed the Singapore Company into the red for the fourth quarter, with full-year profit of USD 24 million lower than its nine-month profit figure for the period ending September 30th 2008.
Cosco Corp did not give a quarter by quarter breakdown for the last three months of 2008. CSG has had close to one-fifth of its order book of just over 100 new buildings either delayed or cancelled. The Chinese shipbuilder has now agreed to delivery delays for 16 bulkers and accepted cancellations for a further four.
The shipyard group was also hit by higher operational costs and expected USD 89 million in losses to be recognized on construction contracts. Cosco said that the losses stemmed from higher steel costs between the time the vessels were ordered and the time the orders for steel were placed. It also blamed higher outsourcing costs and tighter pre-delivery inspections by owners. Cosco Corp, which is also involved in dry bulk ship owning and operation, warned that it was facing an uncertain outlook.
The Singapore Company said “The market is likely to deteriorate further before it recovers. This is expected to result in fewer new shipbuilding and offshore marine engineering contracts. Despite the cancellations and delays the shipyard group still has an order book of USD 7.3 billion with deliveries through to 2012.”
Mr Jiang Li Jung Cosco vice-chairman said “Our group will stay focused on improving our operational efficiencies by scaling the technology learning curve and leveraging on our land and labor comparative cost advantage as we gain further experience and momentum in our diversified business.”