Yangzijiang reports 3Q19 net profit fell 10 percent

Yangzijiang Shipbuilding reported Wednesday its third quarter net profit fell 10 percent on-year to 702.26 million yuan on wider losses on associated companies and joint ventures.

CGS-CIMB had forecast earnings of 800 million yuan for the quarter.

Revenue for the quarter ended 30 September rose 1 percent on-year to 5.42 billion yuan, the Chinese shipbuilder said in a filing to SGX.

The core shipbuilding segment generated revenue of 3.2 billion yuan, up from 2.7 billion yuan in the year-ago period, as 13 vessels were delivered, compared with six a year earlier, the filing said.

The trading business posted revenue of 1.5 billion yuan, down from 2.1 billion yuan in the year-ago quarter.

Other shipbuilding-related businesses, such as shipping logistics and chartering and ship design services, posted revenue of 186 million yuan, up from 149 million yuan in the year-ago quarter.

The share of loss of associated companies and joint ventures surged to 23.19 million yuan from a 1.89 million yuan loss in the year-ago period, mainly on the share of loss on venture capital investments, and the share of profits of around 3.4 million yuan from its joint venture with Mitsui E&S Shipbuilding, Yangzijiang said.

Other losses were 44.46 million yuan, compared with other gains of 284.49 million yuan in the year-ago quarter, the filing said.

“The losses mainly consist of a foreign exchange loss of 27 million yuan and fair value loss of 47 million yuan on derivative financial instruments which was partly offset by 19 million yuan subsidy income, and gains of 13 million yuan from the sale of scrap material,” the filing said.

Expenses dropped 60 percent on-year in the quarter to 189.59 million yuan, Yangzijiang said.

Yangzijiang issued a mixed outlook.

“The trade tension and the weak economic outlook will continue to weigh on shipping demand. Shipowners will need to consider the cost of low-sulphur fuel, time taken to install scrubbers, age of old vessels, cost of new vessels, among other factors, before making a decision on order placement,” the company said.

“On a positive note, research suggested that new order momentum could pick up as the market adapts to new dynamics, especially as shipowners decide to scrap more older vessels and renew their fleet with environmentally friendly ones,” it added.

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