Sluggish marine engineering and shipping markets continued to put pressure on the performance of COSCO Corporation (Singapore) Limited, a shipbuilding, marine engineering and dry bulk shipping group, as the company suffered a net loss of SGD 36.8 million (USD 27.4 million) in the second quarter of 2016.
The net loss for the same quarter a year earlier stood at SGD 4.7 million. The widened quarterly loss was attributed to losses in the company’s shipyard and shipping operations.
Gross profit was down by 80.5% to SGD 11.5 million from SGD 59 million reported in the second quarter of 2015, while group turnover dropped by 10.6% to SGD 762.9 million in the quarter, from SGD 853.5 million recorded a year earlier.
Furthermore, turnover from shipyard operations was down by 10.5% to SGD 754.6 million from SGD 843.4 million in the second quarter of 2015, due to lower revenue contribution from marine engineering, partially offset by an increase in revenue from ship building segment.
Turnover from dry bulk shipping and other businesses decreased by 17.8% to SGD 8.3 million from SGD 10.1 million seen in the second quarter of 2015 as the current short-term rates were lower than the more favorable charter rates secured in the same period a year earlier.
“The bearish industry outlook looms large in the near term as external weaknesses beyond our control continue to brew across our markets. The offshore marine industry remains weak due to persistently low crude oil prices. The shipbuilding industry continues to falter on over-capacity amidst a weak global economy. Subdued global economic conditions have led to depressed shipping rates,” Captain Wu Zi Heng, Vice Chairman and President, said.
As at June 30, 2016, the company’s order book stood at USD 7.6 billion with progressive deliveries up to 2018. New orders received in the first half of 2016 include one trailing suction hopper dredger, one self-elevating workover unit, two crude oil tankers and four container vessels.
COSCO Corporation expects the difficult and challenging business and operating conditions to persist or even worsen, and as such, “2016 will remain a very difficult year for the group.”