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Cosco Corp Q1 profit plunges 94%

Cosco Corp Q1 profit plunges 94%
Cosco Corporation (Singapore) Limited reported a plunge in first quarter net profit as its operating conditions continued to deteriorate amid the shipbuilding industry slump.

Profit for the quarter ended 31 March 2015 was registered at SGD766,000 ($574,700), plummeting 94% from SGD12.63m in the previous corresponding quarter.

The quarterly revenue also dropped 5% year-on-year to GSD991.17m due mainly to decrease in shipyard and dry bulk shipping earnings.

The Chinese offshore marine engineering, shipbuilding, ship repair and dry bulk shipping group expects challenging business and operating conditions to persist in 2015.

“The persistent industry slowdown continued to put tremendous pressure on our performance in Q1 2015. Against such headwind, our group continued to step up our efforts in contract negotiations and managed to secure new orders in Q1 2015 which include seven container vessels, one shuttle tanker and one module carrier,” said Wu Ziheng, vice chairman and president of Cosco Corp.

As at 31 March this year, the group’s orderbook stood at $8.1bn with progressive deliveries up to 2017.

In the first three months, Cosco Corp delivered five bulk carriers, three PSVs, one oil tanker, one semi-submersible accommodation vessel and one floating accommodation unit.

As the group continues construction in 2015 on new ship building contracts that were secured in recent years at low contract values due to the slumping shipping market then, the group expects operating margins on these new shipbuilding projects to continue to be under pressure.