SINGAPORE (Feb 28): Earnings of mainboard-listed shipbuilder Yangzijiang Shipbuilding sank 30% to RMB642.3 million ($127.9 million) for 4QFY2019 ended December, from the RMB912.1 million logged a year ago.
This comes on the back of a 2% reduction in its revenue to RMB 4.8 billion in 4QFY2019 following lower volume of trading activities in the quarter.
Segmentally, its core shipbuilding business generated higher revenue of RMB3.3 billion, following the delivery of 13 vessels. The 2 additional vessels delivered in 4QFY2019 compared to 4QFY2018 translates to a 6.5% increase in the revenue from the segment.
A simultaneous increase was observed in its shipbuilding related business that inched up a smidgen to RMB261 million, from RMB211 million a year ago. The segment which comprises shipping logistics and chartering as well as ship design services, benefitted from an expanded fleet size this quarter.
However, revenue growth was constrained by a contraction in its trading activities to RMB 879 million from RMB1.1 billion in 4QFY2018, following lower volume of trades.
Overall, Yangzijiang’s earnings for FY2019 was up 1% to RMB3.11 billion, from RMB3.07 billion in FY2018.
On a fully diluted basis, earnings per share (EPS) was RMB78.9 cents for FY2019, from RMB77.6 cents.
Revenue for the year was up 2% to RMB23.6 billion, mainly from higher trading volumes in FY2019, compared to FY2018.
However, despite delivering 59 vessels – 11 more than FY2018 – the group was dragged by lower shipbuilding revenue due to the construction of less large size containerships in the year.
Meanwhile the shipbuilder had operating costs of RMB19.3 billion – 1% up from FY2018 – following the inclusion of RMB96 million to its investment segment to account for value added taxes and levies on interest income.
In line with this, its debt investment at amortised costs decreased slightly to RMB14.4 billion compared to RMB14.8 billion in FY2018.
At RMB896.2 million, total expenses for the year was up 26.8% as finance costs surged with an increase in total borrowings.
As at December, cash and cash equivalents stood at RMB10.1 billion, down from RMB6.6 billion in FY2018.
Yangzijiang’s board has proposed a final cash dividend of 4.5 cents, down from 5 cents issued a year ago. The payment date will be announced at a later date, subject to shareholders’ approval at an upcoming annual general meeting.
Looking back, 2019 was a tough year due to the weak economic outlook brought on by trade tensions and the IMO ruling on sulfur emission levels permitted which caused many ship owners to postpone their investments in new vessels, the group notes in a regulatory filing on Friday.
On a personal front, the shipbuilder was hit by rumours that its executive chairman Ren Yuanlin was “missing”, in 3QFY2019.
Specifically, Ren was assisting in the investigations of a corruption case involving Liu Jianguo, a “veteran political patron of the shipbuilding industry” who is also Yangzijiang’s largest investor.
Liu is under probe by the Central Commission for Discipline Inspection in Beijing, the anti-graft body of China’s Communist Party.
Ren has since returned to the shipbuilder in end December.
See: Yangzijiang's Ren to resume work after assisting with graft probe
The group is now trying to stay afloat amid the novel coronavirus outbreak which originated in the Chinese province of Wuhan. “We are doing our utmost to prevent the coronavirus fiasco from affecting the yards and production activities. We will also optimize production resources to minimize any disruption to the delivery schedule,” says CEO Ren Letian.
To this end, the group is looking to continue building high-quality vessels while expanding the company’s strengths in building LNG-related clean energy vessels.
Shares of Yangzijiang closed at 98 cents up 0.52% on Thursday, before its results announcement.
