Diao Weicheng, executive chairman of Avic Maritime, admitted that the two shipyards, Avic Dingheng Shipbuilding and Avic Weihai Shipyard, are currently not making money due to the prolonged recession of the shipbuilding sector, particularly in China.
The two yards are under Avic International Holding Corporation (Avic Int'l), the parent firm of Avic Maritime. Diao said Avic Maritime is now waiting for the right opportunity to inject its major shareholder's two shipyards into the group.
“We are now working to improve and enhance the operational management of the two yards,” Diao said, adding that the plan is to achieve a breakeven at the yards by 2016.
“Dingheng will focus on chemical tankers and LNG carriers, and we are developing a new 20,000 dwt chemical tanker in cooperation with Deltamarin. For Weihai, we are also cooperating with Deltamarin to design container vessels and bulk carriers which will feature low fuel consumption, high efficiency and be competitive in the market,” he told Seatrade Global.
Avic owns a 80% stake in Finland’s ship design firm Deltamarin following an investment in 2013.
Sun Yan, ceo executive director at Avic, shared that Dingheng currently sits on an order for 17 stainless steel and coated chemical tankers and bitumen tankers which have a combined contract value of approximately $700m.
“Dingheng yard is fully booked in terms of production for 2015 and nearly fully booked for 2016. At Weihai, we will develop new designs of containerships and bulkers, and venture into new construction such as ro-ro passenger ships and cruiseships,” Sun said.
Diao pointed out that both Dingheng and Weihai yards are among the 60 ‘white list’ Chinese shipyards that are expected to benefit from prioritised financial support from the local banks.
In its diversification moves, Avic in early April signed a sale and purchase agreement to acquire 60% stake in Avic Zhenjiang Shipyard Marine to expand its OSV and related business. The target company is in the business and trade of acquiring, owning, selling, brokering and chartering of various types of vessels, including tugboats and offshore vessels.
On the outlook of the offshore sector, Li Meijin, executive director of Avic, believed that the short term outlook would remain challenging, but the market is not expected to stay sluggish in the long run as oil prices would eventually have to rise.
Singapore-listed Avic has also diversified through organic means by establishing a new joint venture with Deltamarin to handle EPC projects. The joint venture, Deltamarin Floating Construction, focuses on delivering EPC solutions on a turnkey basis, and there are already EPC projects awarded to the company.
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