SINGAPORE (Apr 26): Yangzijiang Shipbuilding reported earnings of RMB595.1 million ($124.8 million) for the 1Q ended Mar 2018, down 11% from RMB667.7 million a year ago on lower margins and other losses booked over the quarter.
Revenue grew 6% to RMB5 billion from RMB4.7 billion in 1Q17 despite lower vessel deliveries, supported by the progressive construction of larger-size containerships and slightly higher revenue generated from the group’s shipbuilding and related businesses as well as its trading businesses and higher charter income.
Notably, gross profit margin for Yangzijiang’s core shipbuilding business fell to 17% in 1Q18 from 23% a year ago, mainly due to the appreciation of the RMB against USD since the beginning of 2017, and the increase in raw material prices.
The group also recorded other losses of RMB42 million over the quarter compared to a gain of RMB91 million a year ago, mainly due to a foreign exchange (forex) loss and fair value loss of RMB141 million and RMB57 million, respectively.
Yangzijiang says it has secured new orders for nine vessels with a total contract value of US$628 million in the year to date (YTD), which will keep the group’s yard facilities highly utilised up to 2020.
Although orders for two units of containerships and another two units of bulk carriers were terminated in 1Q18 prior to their construction, the group says it has received certain down payments from these customers, which will be recognised according to its accounting policy.
“While the market sentiment improved, we also face some uncertainties brought by protectionism on international trade, and the fluctuations in exchange rate and raw material prices. Yangzijiang has always been prudent and careful in managing risks, which is an important factor for our resilient and stable performance throughout market cycles,” says Ren Yuanlin, Executive Chairman of the group.
“We have a healthy order book, a strong financial position and an established management and operational system. All these factors prepare us to deal with the uncertainties and fortify our position as a strong shipbuilding group in the world,” he adds.
Shares in Yangzijiang closed 1 cent higher at $1.18 on Thursday.
