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China Ocean Shipbuilding H1 loss widens to $36m

China Ocean Shipbuilding H1 loss widens to $36m
China Ocean Shipbuilding Industry Group (Cosig) saw first half net loss widen by 27% to HKD282.5m ($36.4m) from HKD222.3m in thesame period last year, the company said in a stock market announcement.

Cosig blamed the increase in net loss on an increase in gross losses which were partially offset by the absence of certain one-off expenses such as the loss on modification of convertible notes payable and share-based payments expenses incurred in the previous corresponding period.

Revenues also dropped almost a fifth to HKD67.3m from HKD83.1m previously. The drop was principally due to a price adjustment on several ship orders in order to secure the delivery of these ships, which offset revenues from new shipbuilding projects, Cosig said. It added that the group's new financial leasing business had begun to contribute revenues of HKD1.78 million.

Operational level losses ballooned to HKD151.7m from HKD16.6m previously fixed costs outweighed reductions in newbuilding orders and prices.

"In the first half of 2015, the Group and the entire shipbuilding market faced challenging economic circumstances. Held down by slack market forces in 2015, new shipbuilding orders declined in China during the period under review, following last year’s pick-up in the first half of the year. (Meanwhile) the lack of liquidity also remained a main concern for shipbuilding companies", said Cosig.

Shipbuilding segment revenues fell 21% to HKD65.5m. While the group started construction work on new ship orders obtained last year, these revenues were offset by a discount given to a defaulting ship buyer.Cosig said as at June 30, its order book comprised four heavy lift vessels, four multi-purpose vessels and a chemical tanker.