China Rongsheng Heavy Industries Group Holdings Ltd. , the shipyard seeking government financial support, posted a first-half loss after a drop in vessel orders caused sales to plunge 71 percent, said in the company's press release.
The net loss of 1.26 billion yuan ($206 million) compared with a profit of 215.8 million yuan a year earlier, Rongsheng said in a Hong Kong stock exchange filing. Revenue at China’s biggest yard outside state control totaled 1.58 billion yuan.
Rongsheng has pared workforce as it struggles with the order slump and a credit crunch in the world’s second-largest economy. China, the world’s biggest shipbuilding nation, this month announced a three-year plan to support the industry as a third of its shipbuilders may shut down in about five years amid a global vessel glut.
“All eyes are on Rongsheng’s liquidity situation as investors need to find out how bad it really is,” Lawrence Li, an analyst with UOB Kay-Hian Holdings Ltd., said before the earnings announcement. “The outlook will remain bleak.”
Shares of Rongsheng fell 5.9 percent to close at 96 Hong Kong cents, the lowest in almost four weeks, in Hong Kong trading, before the earnings were released. The stock has slumped 23 percent this year.
With sales plunging and few new orders coming, Rongsheng’s cash and cash-equivalents decreased by 1.27 billion yuan to 871 million yuan as of the end of June. Total borrowings were 24.85 billion yuan, it said.
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