Cosco Corp posts sharp drop in Q3 profit

Third quarter net profit for the Singapore-listed firm dived 84% year-on-year to SGD4.22m ($3.39m) from SGD26.56m in the previous corresponding period.

However, revenue during the quarter inched up 6% to SGD989.43m due mainly to growth in revenue from the marine engineering segment which more than offset the lower earnings contribution from shipbuilding and ship repair businesses.

“Our industry outlook remains cautious amidst the uncertain global economic climate and difficult operating conditions. The shipbuilding projects currently under construction for contracts secured at lower value during the market slump in the recent years will exert downward pressure on our profit margins,” said Wu Zi Heng, vice chairman and president of the company.

“We will continue to focus on efficiency and productivity while upgrading our technical capabilities to move up the value chain,” Wu said.

As at 30 September 2013, the group's orderbook stood at $7.2bn with progressive deliveries up to 2015.

The group believes that with continuing excess capacity in the shipping industry and the uncertain and weak global economic conditions, shipowners may be reluctant to place new orders for vessels, leading to the company experiencing a decline in new orders and underutilised yard capacity.

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