Singapore-listed Chinese shipbuilding and dry bulk shipping group Cosco Corporation Singapore (Cosco) posted a net profit of SGD4.25 million (USD3.19 million), down 82% year-on-year for the first quarter that ended 31 March 2015.
Revenue also dropped 5% to SGD990,000 in 1Q15 as compared to SGD1.04 million in 1Q14. Cosco attributed its lower earnings to the decrease in shipyard and dry bulk shipping revenue, according to its filing to the Singapore Exchange (SGX).
The company’s revenue from its shipyard operations segment decreased by 4.7% y/y to SGD980.8 million in 1Q15 from SGD1.03 billion in 1Q14, owing to lower revenue contribution from marine engineering and ship repair. This was partially offset by an increase in revenue from shipbuilding.
In 1Q15, Cosco Group delivered 11 ships, including four bulk carriers and one platform supply vessel from COSCO Zhoushan shipyard. COSCO Guangdong shipyard delivered one bulk carrier and two platform supply vessels. In the meantime, COSCO Dalian delivered one oil tanker, while COSCO Nantong shipyard delivered one semi-submersible accommodation vessel and one floating accommodation unit. As at 31 March 2015, Cosco Corp’s order book stood at USD8.1 billion with progressive deliveries up to 2017.
Meanwhile, Cosco’s dry bulk shipping and other business were affected by the depressed freight rate, which saw the Baltic Dry Index (BDI) hit a historic low of 509 points on 18 February 2015 and averaged around 614 points in 1Q15. Thus, the company’s revenue from dry bulk shipping and other businesses decreased 11.9% y/y to SGD10.4 million in 1Q15, from SGD11.8million in 1Q14.
Going forward, Cosco expects more headwinds in shipping sectors due to the excess tonnage in the market. Despite being an early mover and a leading player in the Chinese shipyards in the offshore marine segment, the company foresees greater competition due to the increasing number of players in the market amid the low crude oil price.
Therefore, Cosco will continue to strengthen its expertise and capabilities to reach out to a broader customer base to lay an even firmer foundation for long-term sustainable growth in offshore marine engineering and new shipbuilding operations.