Yangzijiang profit up 45% as deliveries surge.
A SURGE in vessel deliveries helped Yangzijiang Shipbuilding (Holdings), the Singapore-listed mainland Chinese shipbuilder, to post a 45% increase in net profit to almost Yuan2.3bn ($338.2m) last year, up from nearly Yuan1.6bn in 2008.
Revenue climbed 44% to more than Yuan10.6bn in 2009, against Yuan7.4bn a year earlier.
Shipyard executive chairman Ren Yuanlin said Yangzijiang Shipbuilding delivered 40 vessels last year, including 16 in the fourth quarter, compared with 27 ships in 2008. These vessels comprised boxships ranging in size between 1,350 teu and 4,250 teu and multi-purpose cargo vessels varying between 7,600 dwt and 92,500 dwt.
He added that gross profit soared 64% to Yuan2.2bn in 2009 on the back of higher profit margins, which rose to 21% in 2009, up from 18.5% in 2008. This followed the delivery of higher margin vessels in the first half of last year.
The full-year results were buoyed by a strong fourth quarter with net profit climbing by 63% to Yuan645.1m between October and December following an 84% increase in revenue to Yuan3.4bn.
Mr Ren confirmed that no orders had been cancelled ?and does not expect any cancellation in respect to its existing contracts?.
He said the company, which owns shipyards at Jiangyin and Jiagjiang in Jiangsu province, secured orders to build four 92,500 dwt multi-purpose bulkers in the fourth quarter.
These new contracts took the shipyard"s total orderbook to 127 vessels worth $5.6bn and included ships for German owners Hansa Shipping, Peter Dohle and Rickmers Reederei, Canada"s Seaspan and China Ocean Shipping Group.
?The profitability for the financial year is encouraging for the whole group,? Mr Ren said. ?We stuck to our vessel delivery schedule and the added focus will continue to be on the execution of orders. We also managed to keep operating costs under control.?
Yangzijiang Shipbuilding is currently in the process of setting up two companies with several strategic partners that will focus on ship demolition and scrap steel processing. While the shipyard was only expected to take a minority interest in the two companies, Mr Ren said the move was being done as a way of diversifying the shipbuilder"s revenue streams.
One of the companies is Jiangsu Xinfu Shipbuilding, in which the shipbuilder has already agreed to invest $9m for a 20% stake, which is developing a ship recycling yard, with ship repair as a supplemental business. The new yard is due to be completed in July this year when phased operations will start.
?Management is hopeful that these new companies would eventually be important business segments to complement its shipbuilding business,? Mr Ren said.