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Huarong Energy stays in the red with a loss of $1bn

Huarong Energy stays in the red with a loss of $1bn
Huarong Energy has stayed in the red for 2015 posting a loss of RMB6.54bn ($1.01bn), as the group continues on working to ease its liquidity pressure to avert bankruptcy.

Hong Kong-listed Huarong, formerly Rongsheng Heavy Industries, narrowed its 2015 loss from the larger deficit of RMB7.75bn. The group remains in a precarious financial position with total borrowings and financial lease liabilities amounting to RMB22.68bn, of which RMB17.37bn were either overdue or would be due for repayment within 12 months.

Last year, Hurong Energy generated a revenue of RMB738.5m from sales of vessels contributing RMB402.9m, shipbuilding and other contracts contributing RMB306.9m, and sales from crude oil contributing RMB28.7m.

Huarong has been undertaking a number of measures to improve its liquidity and financial position, including executing share subscription agreements for creditors, disposing of assets and liabilities of shipbuilding, offshore engineering and marine engine building businesses, convincing lenders to ease repayment dates, implementing operation plan to generate income, and securing additional sources of financing, among others.

“Should the group fail to achieve the above-mentioned plans and measures, it might not be able to continue to operate as a going concern (…),” Huarong said.

It further commented: “Looking forward to 2016, the global energy market is expected to remain volatile. The shipping market is unlikely to be recovered from overcapacity in the near future.

“It is expected that China’s shipbulding industry will accelerate its transformation and will generally enter into an industrial structure adjustment stage.”