Singapore-listed Cosco Corporation (Singapore) Limited (Cosco or the Company), a leading ship repair & marine engineering and shipping group in China, posted a net loss of $406.9 million (SGD 570 million) for financial year 2015 (FY 2015) ending Dec. 31, 2015, compared to a net profit of $14.9 million (SGD 20.9 million) in the previous year, according to financial results released by the firm Monday.
Company turnover stood at $2.5 billion (SGD 3.5 billion) in FY 2015, down 17.4 percent from $3.1 billion (SGD 4.3 billion) in FY 2014 as revenue from Cosco's shipyard and shipping business declined.
Shipyard operations fell 17.3 percent to $2.5 billion (SGD 3.5 billion) in FY 2015 from $3.0 billion (SGD 4.2 billion) in FY 2014 on lower contributions from marine engineering, which was partially negated by increased revenue from the ship building and ship repair segments.
Cosco posted a gross loss of $153.3 million (SGD 214.8 million) in FY 2015, down from a gross profit of $207.7 million (SGD 291 million) a year earlier. The loss was attributed to lower revenues and higher inventory write-down which rose $131.9 million (SGD 184.8 million) to $220.7 million (SGD 309.3 million) arising largely from the impairment made for the dynamic positioning 3 (DP3) Deepwater Drillship, which it indicated is now available for lease or sale.
The company added that administrative expenses rose $248.9 million (SGD 348.8 million) to $372.9 million (SGD 522.5 million) mainly on the back of an increase in allowance for impairment of trade and other receivables of $253 million (SGD 354.5 million) to $271.5 million (SGD 380.3 million) relating mainly to construction contracts on modules of drillship and FPSO (floating production, storage and offloading) for certain Brazilian customers with uncertainties in their project status. Meanwhile, interest expense rose 30.7 percent to $119.1 million (SGD 166.9 million) in FY 2015 due to higher bank borrowings used to fund shipyard operations.
“The global offshore market continued to slow down significantly with no signs of improvement. Amidst persistent weakness in the state of the global economy and depressed crude oil prices, the Group continues to face adverse unfavorable market conditions. Against the backdrop of these difficult and challenging business and operating conditions, which is likely to persist and even worsen in 2016, our Group will capitalize on the downturn to improve our capabilities for long-term sustainable growth in our offshore marine engineering and new shipbuilding operations,” Cosco's Vice Chairman and President Captain Wu Zi Heng said in the press release.
The company's orderbook as at Dec. 31, 2015 stood at $8 billion with progressive deliveries up to early 2018. However, Cosco stated that the orderbook is subject to revision due to new, cancellation, variation or scheduling of orders that may arise in the future. These may include modules of drillship and FPSO contracts for certain Brazilian customers.
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