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Yangzijiang Shipbuilding net profit falls 17% in Q3

YANGZIJIANG Shipbuilding (YZJ) reported Wednesday evening a 17 per cent fall in net profit for its third quarter ended Sept 30.

Net profit tumbled to 585.2 million yuan (S$119.4 million) for the quarter compared to 702.3 million yuan in the year-ago period.

The mainboard-listed shipping group, which is based in China, saw revenue decline 34 per cent year on year to 3.58 billion yuan, from 5.42 billion yuan for Q3 2019, arising from a fall in trading revenue and fewer vessels delivered from its core shipping business.

Revenue from the core shipbuilding business fell to 2.55 billion yuan, down 20.9 per cent from 3.23 billion yuan a year ago, as YZJ delivered nine vessels in the latest quarter versus 13 previously.

Trading revenue plunged 78.5 per cent to 312 million yuan, from 1.45 billion yuan in the same period last year, due to lower trading volume.

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Revenue from other shipbuilding businesses, which consist of shipping logistics and chartering as well as ship design services, was slightly higher at 193.5 million yuan for Q3 2020, than the 186.2 million yuan in the year-ago period due to expanded fleet size.

The group recorded a surge in impairment loss on debt investment at amortised costs of 189.6 million yuan for the third quarter, tripling year on year from 62.9 million yuan. YZJ said this was mainly from higher provisions made for non-performing category investments in Q3 2020.

For the first nine months of this year, net profit stood at 1.76 billion yuan, a 28 per cent decline from the 2.46 billion yuan for the same period last year.

Revenue for the nine months amounted to 11.85 billion yuan, down 37 per cent from the 18.75 billion yuan for the year-ago period.

Since its latest order book update at end-August, YZJ has further secured new shipbuilding orders for five bulk carriers and one chemical tanker worth a total of US$139 million, it said on Wednesday. That brings the year-to-date new orders clinched to about US$834 million for 29 vessels.

As at Sept 30, the group had an outstanding order book of about US$2.4 billion for 67 vessels. YZJ said these orders will provide it with a stable revenue stream for at least the next 1.5 years.

Executive chairman and chief executive officer Ren Letian said the group has noticed "encouraging signs of recovery" in the shipping market in the past few months.

"Demand for containers on major routes has been strong while the rationalised shipping supply struggled to cope with it," he said, adding that container charter rates have "rebounded strongly".

"As the market gradually adapts to new trade and shipping patterns brought about by Covid-19, including the need for shorter trips within regions and expedited services, Yangzijiang is in an advantageous position to capture the business opportunities amid and post the pandemic," Mr Ren said.

YZJ shares rose 1.5 Singapore cents or 1.6 per cent to trade at 95.5 cents as at 9.12am on Thursday.

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