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JES aborts mining investment, narrows Q1 loss

JES aborts mining investment, narrows Q1 loss
Chinese shipbuilder JES International is aborting a plan to invest into mining, but it is continuing with an investment into the forestry business, the company said in its first quarter results announcement.

The Singapore-listed firm has also managed to cut back on its losses in the first quarter even as revenue plunged due partly to a sharp decrease in other operating expenses.

JES announced that it is currently in negotiation with Singapore-based Mineriver over “an amicable termination of the group’s investment.”

In November last year, the Chinese yard had agreed to take a 30% stake in a mining company in Xinjiang, of which it would invest about $102m in Mineriver, which in turn holds mineral exploration rights in China’s Xinjiang Uygur Autonomous Region.

JES had said it aims to diversify its business due to the current downturn of the global shipbuilding industry, but it affirmed that its core business will remain in shipbuilding.

A separate investment of $65m to acquire 51% stake in forestry enterprise SCIBOIS in Congo is still progressing, JES updated.

Meanwhile, JES posted a first quarter net loss of RMB29.46m ($4.73m), improving from a loss of RMB92.52m in the previous corresponding period.

Revenue during the quarter plummeted 91.9% year-on-year to RMB18.49m due to a fall in production activity. The group’s revenue was fully contributed by construction of bulk carriers in both the first quarter of 2014 and the first quarter of 2013.

Other operating expenses incurred in the first quarter fell sharply to RMB6.8m compared to RMB79.2m in the same period of last year.

“The group is of the opinion that the present operating environment remains challenging as the US and Europe economies remain on a protracted path to recovery,” Singapore-listed JES commented.

“Further, the group, based on its present projection of cash flows, foresees short-term challenging cash flow issues but with the current plans to obtain additional financing given the increased credit limit granted by certain banks and the delivery of vessels, the group believes that it is able to meet its obligations to repay its liabilities as they fall due and payable unless there are unforeseen circumstances.”

To-date, the shipbuilder has confirmed the securing of new contracts and options potentially worth up to $572m.

TAGS: Shipyards