Offshore engineering, shipbuilding and dry bulk shipping group, COSCO Corporation (Singapore) has recorded net loss of 466.5 mill. $ on turnover of 2.6 bn $ in 2016 amidst the marine and shipping industry slump. The group sees »cloudy skies and tumultuous external headwinds« for the industry[ds_preview].
COSCO Corporation’s (Singapore) turnover decreased 27.3% to 2.6 bn $ in 2016 from 3.5 bn $ in 2015 owing to decrease in shipyard and shipping revenues. The group’s turnover from shipyard operations decreased 27.4% t o 2.5 bn $ in 2016 from 3.5 bn $ in 2015 due to lower revenue contribution from ship repair, shipbuilding and marine engineering. The Group delivered 18 projects in 2016, namely four oil tankers, three livestock carriers, two platform supply vessels, three module carriers, two jack-up rigs, one emergency, response & rescue vessel, one salvage lifting vessel, one cargo & training ship, and one semi-submersible accommodation vessel.
Turnover from dry bulk shipping and other businesses decreased 22.6% from 39.4 mill. $ in 2015 to 30.5 mill. $ in 2016. The Group also scrapped one of its dry bulk carriers in October 2016. Gross loss increased 48% to 317.3 mill. $ in 2016 from 214.8 mill. $ in 2015 due to losses from shipping and shipyard operations, which recorded revenue decreases and inventory write-downs.
»FY 2017 continues to be tough-sailing for our Group under cloudy skies and tumultuous external headwinds engulfing the shipping and marine industries. Amidst continuing weakness in the state of the global economy, challenging market conditions and depressed crude oil prices, an increasing number of the Group‘s customers may be unable to me et their contractual payment obligations to the Group.« Mr. Gu Jing Song, Vice Chairman and President
Other income comprising gain from the disposal of scrap metal, interest income and others increased 8.9% to 88.6 mill. $ mainly due to higher government grants, partially offset by lower sales value of scrap materials and lower interest income. Administrative expenses decreased 187.5 mill. $ to 335.0 mill. $ due to the decrease in allowance for impairment of trade and other receivables from customers in the offshore marine engineering segment.
Interest expense increased 34.7% to 224.8 mill. $ in 2016 due to higher bank borrowings used to fund shipyard operations. Overall, the group narrowed its net loss attributable to equity holders of the Company to 466.5 mill. $ in 2016 from net loss of 570.0 mill ion in 2015 as losses in shipyard and shipping operations were partially cushioned by an increase in other income and decrease in trade provision.
COSCO expects decline in new orders and delivery delays
New orders received in 2016 include one trailing suction hopper dredger, one self-elevating workover unit, two crude oil tankers and seven container vessels. As at 31 December 2016, the Group‘s gross order book stood at approximately 6.4 bn $ with progressive deliveries up to 2019. These include modules of drillship and FPSO contracts for Brazilian customers which amount to approximately 1.27 bn $. It also includes several offshore marine engineering projects which have been substantially completed in construction but are yet to be delivered due to customers‘ requests for extension of delivery.
The Group expects possible decline in new orders and more project delivery delays or request for deferments from some customers. As announced in December 2016, parent company China COSCO Shipping Corporation group will be restructuring its shipyard businesses and centralise operations and management. The Parent Group plans to acquire the Company’s equity interests in COSCO Shipyard Group, COSCO ( Nantong) Shipyard and COSCO (Dalian) Shipyard.
