Yangzijiang Shipbuilding's Q4 profit plunges 93%

YANGZIJIANG Shipbuilding (YZJ) saw its fourth-quarter net profit plunge to 41.45 million yuan (S$8.88 million), 93 per cent lower than 636.56 million yuan a year ago, mainly on higher impairments and foreign exchange-related losses.

Revenue fell 17 per cent to 3.13 billion yuan but gross profit rose 10 per cent to 925.60 million yuan as cost of sales fell 25 per cent to 2.2 billion yuan.

During the quarter, the shipbuilder delivered six vessels according to schedule, compared to nine last year.

Other losses surged 137 per cent to 615.27 million yuan due mainly to impairment provisions of 210 million yuan made for vessels owned and operated by YZJ's shipping arm and 151 million yuan made for finance lease receivable for vessels on bare-boat hire purchase arrangement, as well as additional impairment provision of 95 million yuan made for HTM (held-to-maturity) investments and the foreign exchange-related losses.

Full-year net profit fell 29 per cent to 2.5 billion yuan on a 4 per cent increase in revenue to 16.01 billion yuan.

Earnings per share was 64.19 RMB cents for FY15, compared to 90.89 RMB cents for FY14.

Net asset value for the group stood at 568.9 RMB cents as at Dec 31, 2015, compared to 534.3 RMB cents as at Dec 31, 2014.

YZJ declared a final dividend per share of 4.5 Singapore cents, compared to 5.5 Singapore cents for FY14.

Its outstanding order book of US$5.4 billion comprises 116 vessels, which will upkeep the optimal use of its yard facilities up to 2018.

Recognising the industry headwinds facing shipbuilders and shipping companies globally, YZJ said it has undertaken "prudent . . . impairment provisions for a few items".

But YZJ's chairman, Ren Yuanlin, also said YZJ is "prepared for the worst case scenario", having built a "healthy order book and strong financial position".

In addition, YZJ has also sought to product diversification through developing clean-energy vessels, adding LNG carrier to its portfolio, while continuing to gain orders for its flagship containerships and other products, according to Mr Ren.

The YZJ chairman also noted YZJ has successfully grown its order book over the year, contrary to the industry trend.

"We are confident that given the limited exposure to the offshore sector, risks are within control and will not hinder the long-term growth of our core shipbuilding business," he said.