COSCO Corporation’s Full-Year Loss Widens
COSCO Corporation (Singapore) Limited, a shipbuilding, marine engineering and dry bulk shipping group, saw a net loss of SGD 976.1 million (USD 695.5 million) in 2016, against a net loss of SGD 914.8 million (USD 651.8 million) recorded in 2015, mainly due to losses in shipyard in shipping operations.
COSCO’s revenue decreased by 27.3% to SGD 2.6 billion in 2016 from SGD 3.5 billion in 2015 due to a decline in shipyard and shipping revenue.
Revenue from shipyard operations dropped by 27.4% to SGD 2.5 billion in 2016 from SGD 3.5 billion in 2015, owing to lower revenue contribution from ship repair, shipbuilding and marine engineering.
Additionally, revenue from dry bulk shipping and other businesses went down by 22.6% from SGD 39.4 million in 2015 to SGD 30.5 million in 2016.
The group said it continues to face challenging market conditions in the shipbuilding, shipping and offshore marine industry.
Due to the overcapacity in the shipbuilding industry amidst a weak global economy, the group’s shipyards have had fewer orders and lower contract prices. Additionally, the firm said it faced delivery extensions and cancellations. Subdued global economic conditions have also led to depressed shipping rates for COSCO’s dry bulk fleet.
As of 31 December 2016, COSCO’s gross order book stood at approximately USD 6.4 billion, with deliveries until 2019.
Subdued global economic conditions have also led to depressed shipping rates for COSCO’s dry bulk fleet. In October 2016 and February 2017, COSCO scrapped two of its dry bulk carriers and may consider scrapping more bulkers in 2017.
In the outlook for 2017, COSCO predicts that the shipbuilding and shipping segments will continue to be highly challenging.