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Jinhui narrows loss to $189m, hit by impairment charges

Jinhui narrows loss to $189m, hit by impairment charges

Jinhui Shipping and Transportation has stayed in the red in 2016 due mainly to impairment charges amounting to $158.47m, though it narrowed the loss compared to 2015.

Jinhui Shipping, majority controlled by Jinhui Holdings, reported a 2016 loss of $189.09m, narrowing from the bigger loss of $378.74m in 2015.

The dry bulk shipowner blamed the annual loss on the recognition of impairment loss on owned vessels of $113.01m and impairment loss of $45.46m on assets held for sale of two panamaxes, five supramaxes and one handymax that were completed in 2016.

Most recently, Jinhui Shipping announced the disposal of four supramaxes as the company continues with efforts to readjust its fleet profile and reduce its operational risk exposures to the sluggish dry bulk shipping market.

Revenue for 2016 declined by 30.5% year-on-year to $59.96m.

“2016 was one of the toughest years for dry bulk shipping,” Jinhui commented.

“Both the freight market and asset price went through a confidence meltdown during the first half of 2016, and have since rebounded from its trough to better levels though still uninspiring. The expected path to meaningful recovery and equilibrium is not without its challenges,” it said.

The company observed that a number of factors will continue to determine the pace of dry bulk market recovery, including demand growth from China, stabilisation of dry commodity prices, and reduction in shipbuilding capacity to discourage irrational orders.

Jinhui said the difficulties faced by shipyards, buyers and financiers are all pointing towards a much reduced projected fleet growth to help deflate the tonnage glut.

The company added: “Delays, conversions of bulk newbuilding orders to other vessel types, cancellations, and shipyard defaults are leading to much fewer actual deliveries than previously scheduled. Asset based financing, in particular with respect to maritime assets, will be harder and more expensive to come by going forward.”

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