Cosco's Net Profit Falls to $21.07M in 2014, Down 50% YOY

Singapore-listed Cosco Corporation (Singapore) Limited, one of China's leading ship repair & marine engineering and shipping group, announced Monday that the company's year-on-year net profit fell 50 percent in 2014 to $21.07 million (SGD 26.27 million) from $42.22 million (SGD 52.79 million).

The decline in net profit came despite revenue rising 21.5 percent last year to $3.4 billion (SGD 4.3 billion) from $2.8 billion (SGD 3.5 billion) in 2013 on the back of increased contribution from shipyard operations, which rose 21.9 percent to $3.3 billion (SGD 4.2 billion) from $2.8 billion (SGD 3.5 billion) due to growth in the marine engineering and ship building segments.

Given the current oil price environment, Cosco believes that 2015 will be a difficult and challenging year for the company.

“Our Group maintains a cautious outlook for 2015. The global offshore market has slowed down significantly. Many oil majors have started to cut expenditure leading to fewer orders for deepwater rigs. In addition, a number of offshore rigs and supply vessels delivered in past months have not secured contracts for lease yet. Under such challenging circumstances, new orders have declined. All these developments have taken place against the background of weak global economic conditions which, in the latter half of 2014, were accompanied by steep falls in crude oil prices,” Captain Wu Zi Heng, vice chairman and president of Cosco said in the press release.

At the end of 2014, Cosco has an order book of $8.4 billion stretching into 2017 although this is subject to revision from any new or cancellation of orders that may arise. Among the offshore contracts secured in 2014 included eight platform supply vessels, four emergency response/rescue/field support vessels, four subsea supply vessels, one jackup, one accommodation barge and one floating accommodation unit.