The recent cessation of a shipbuilding contract involved a 2,500-teu container vessel of which 40% deposit was collected by the yard. The yard now has an unsold stock of three 2,500 teu container vessels. The same owner had defaulted on two of the contracts late last year.
The overall difficult business environment in the global shipbuilding sector, which saw higher risks of owners reneging on shipbuilding contracts, contributed to Yangzijiang's lower earnings in the first quarter.
The Singapore-listed company posted first quarter profit of RMB717.17m ($116.13m), a drop of 30% compared to RMB1.02bn of profit a year ago. Revenue also declined 22% year-on-year to RMB2.87bn.
Yangzijiang added that lower revenue from shipbuilding activities was slightly offset by an increase in revenue from other activities such as ship demolition, fabrication, design services and trading of ship supplies businesses.
“The shipbuilding industry has been in a downturn for some time now, and we believe that we have hit the trough as we recently saw signs of renewed activity within the industry,” said Ren Yuanlin, executive chairman of Yangzijiang.
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