Diao Weicheng, executive chairman of China’s Avic, noted that the overall market outlook for the conventional shipping sector has remained negative, especially with the BDI at 28-year low, pointing to a need for the company to have a diversified income base.
“As oil prices dropped drastically since the second half of 2014, offshore and maritime industry is expected to go through major reshuffles. The group sees this as an opportunity to explore the offshore business. We will look at under-valued oil service related companies for potential M&A opportunities,” Diao said.
He added that the company is not yet into any discussion with any party for such acquisitions, joint ventures or strategic alliances in the offshore business.
Apart from its core shipbuilding business, Avic is also involved in ship design, engineering and M&C (management and consultancy). In 2014, it diversified into the EPC (engineering, procurement and construction) business focusing on the maritime and offshore production market.
“Overall, although the shipping and shipbuilding industry has remained challenging, our group has strived against difficult time and our strategies of focusing on ship design and EPC business have rightly positioned ourselves in the market,” said Diao Weicheng, executive chairman of Avic.
Last year, the group delivered 12 vessels including five bulk carriers, three tug boats, one heavy lift multi-purpose carrier, one diver boat, one bunker tanker, and one tug vessel.
Meanwhile, Singapore-listed Avic has significantly boosted its full year 2014 profit despite a drop in revenue.
Net profit for the year ended 31 December 2014 surged to RMB14.44m ($2.31m) compared to RMB2.12m in the previous financial year due mainly to lower operating costs.
Revenue, however, fell 24% year-on-year to RMB455.06m due primarily to decline in shipbuilding revenue.
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