Yangzijiang to cut 10% workforce in 2017, eyes $1.5bn in new orders

The latest rightsizing plan, revealed by Yangzijiang executive chairman Ren Yuanlin, will reduce the Chinese shipyard’s workforce to some 18,000 from 20,000 by the end of 2017. In 2016, Yangzijiang had axed around 6,000 employees, representing 30% of its 20,000 workforce.

“Our plan to reduce workforce by 10% this year is a significant part of our cost savings effort as we put our focus on achieving our targeted $1.5bn in new orders,” Ren told Seatrade Maritime News.

Last year, Yangzijiang landed 19 shipbuilding orders with a total value of around $823m, including a $510m bumper order for six 400,000-dwt VLOCs received from ICBC Leasing. As at 31 December 2016, Yangzijiang had an outstanding orderbook of $4.3bn comprising 85 ships.

“We are not in talks on any big orders to-date, but we expect the new orders to come from the dry bulk shipping segment, which has hit bottom. There will also be a handful of orders for woodpulp vessels, a type of dry bulk carriers,” Ren said.

“We are not hopeful of seeing many new orders for containerships, as the segment is currently facing challenges as seen in the recent consolidation,” he added.

Despite that the shipbuilding market condition has continued to deteriorate and not shown signs of recovery, Yangzijiang has delivered another year of profit.

The Singapore-listed company recorded a 2016 net profit of RMB1.85bn ($269.04m), down 25% from the gain of RMB2.45bn in 2015. The lower profit was partly blamed on additional impairment provision of RMB676m made for the fleet of vessels owned and operated by the group’s shippin business, and impairment loss of RMB336m in property, plant and equipment.

Full year revenue dipped by 6% year-on-year to RMB15.09bn mainly due to vessels constructed and delivered in 2016 were relatively of smaller sizes and lower contract values compared to those in 2015.