Cosco Incurs $27M Net Loss in 2Q 2016, Revenues Fell 11% to $566M

Cosco Corp. (Singapore) Ltd., a major ship repair & marine engineering and shipping group in China, posted a net loss of $27.3 million (SGD 36.8 million) for the second quarter of 2016 (2Q 2015) that ended June 30, compared to a net loss of $3.6 million (SGD 4.8 million) in the previous year, according to company financial results released Friday.

Turnover stood at $565.9 million (SGD 762.9 million) in 2Q 2016, down 11 percent from $619.8 million (SGD 853.5 million) a year ago due to lower incomes from shipyard and shipping operations.

Cosco said revenue from shipyard operations decreased 10.5 percent to $559.8 million (SGD 754.6 million) during the quarter, compared to $625.6 million (SGD 843.4 million) a year ago, with the decline attributed to lower revenue contribution from marine engineering, which was partially offset by an increase in revenue from ship building segment.

“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 ... To build long-term sustainable growth under such conditions, our Group will focus on improving our expertise and capabilities,” Captain Wu Zi Heng, vice chairman and president of Cosco said in the press release.

Turning to its order book, Cosco said the contract value stood at approximately $7.6 billion and deliveries extend to 2018. Orders includes modules of drillship and floating production storage and offloading (FPSO) contracts for certain Brazilian customers which amount to approximately $1.4 billion.

The company however cautioned that the order book is subject to revision arising from new, cancellation, variation or scheduling of orders that may arise.

On the industry outlook for the rest of the year, Cosco expects the “difficult and challenging business and operating conditions to persist or even worsen. As such, 2016 will remain a very difficult year for the Group.”