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Cosco Corp warns of lower full-year earnings due to oil price plunge
COSCO Corporation has warned that its earnings for the year ended Dec 31, 2014, will be significantly lower than those for the year ended Dec 31, 2013, due to the steep fall in crude oil prices over recent months.
The oil rout has had an adverse impact on the global offshore marine industry, and specifically led to a S$90 million one-off charge for the firm's discontinued Octabuoy hull and topside module project.
Cosco's subsidiary, Cosco Nantong, secured the Octabuoy vessel building contract from ATP Oil & Gas (UK), which went into a company voluntary arrangement (CVA) in the UK in July.
Cosco Nantong has since received an initial part payment of about US$5 million from the CVA managers of ATP, but has so far been unable to find a buyer for the Octabuoy. It has thus decided to discontinue the project, which will result in the one-off charge of about S$90 million for the company for the financial year ended Dec 31, 2014.
The company's results are scheduled for release on Feb 16.