Cosco (S) Q1 net losses deepen to S$78.9m

NET losses at mainboard-listed shipbuilder Cosco Shipping International (Singapore) deepened by 4.5 times, and it warned that weak conditions in the shipbuilding and offshore markets will continue to prevail.

The loss attributable to equity holders ballooned from S$14.4 million in the first quarter of 2016 to S$78.9 million for the same period this year.

This was due to losses in shipyard and shipping operations, the Chinese shipbuilder said in a filing to the Singapore Exchange on Friday evening after the market closed.

Loss per share also deepened by 4.5 times to 3.52 Singapore cents this quarter, from 0.64 cent a year ago.

Turnover was down by 44 per cent to S$401.8 million.

Cosco said that shipyard operations recorded lower revenue and incurred inventory writedowns of S$21.2 million. Allowances were also made for expected losses recognised on construction contracts of S$70.6 million.

As at March 31, Cosco's order book stood at US$5.8 billion, with progressive deliveries up to 2020. But this includes several offshore marine engineering projects which have been "substantially completed" in construction, but are yet to be delivered due to customers' requests for extension of delivery.

"This order book continues to be subject to revision from any new, cancellation, variation or scheduling of orders that may arise," it said.

"These orders were secured at low contract values due to the weak global economy and depressed shipbuilding and offshore markets, and the group expects operating margins on new ship building and offshore contracts to continue facing severe downward pressure as these conditions continue to prevail.

"The group expects competition to remain keen even as crude oil prices continue to remain low and global economic conditions remain generally weak."

Cosco's counter closed flat on Friday at S$0.285 before the announcement.