Yangzijiang's net profit halved to $82.72m in Q1

Less number of vessels were delivered during the period.

Yangzijiang Shipbuilding had a rough start to the new decade with its net profits sinking 51% YoY to $82.72m (RMB414.13m) in Q1, compared to $167.99m (RMB840.98m) a year earlier, a bourse filing revealed. Revenue also fell 44% YoY to $698.56m (RMB3.49b) from $1.25b (RMB6.29b) over the same period of comparison.

The lower revenue was attributed to the lesser number of vessels delivered in Q1, as well as disruption in the company’s China activities due to the outbreak of COVID-19 in the country. A total of 12 vessels were delivered in Q1, lower than the 15 vessels in Q1 2019.

Also read: Yangzijiang Shipbuilding bags $1.63b vessel contract

The COVID-19 outbreak in China in February and March 2020 also pushed down revenue to $460m (RMB2.37b), 33% YoY lower than the same quarter last year.

Meanwhile, lower volume of trading activities in this quarter led to trading business contributing a lower revenue of $107.47m (RMB538m) in Q1 from to about $430m (RMB2.16b) in Q1 2019.

Revenue generated by other shipbuilding related businesses such as shipping logistics & chartering and ship design services was higher at $28.96m (RMB145m) during the past quarter when compared to the $24.37m (RMB122m) of Q1 2019, mainly due to an expanded fleet size, reported Yangzijiang.

Interest income came at $101.28m (RMB507m), lower than the $117.68m (RMB589m) last year, in line with the decreased size of financial investments.

Yangzijiang noted the significant disruption in supply and demand in the shipbuilding industry amidst the ongoing pandemic.

“Global shipping has seen decreased demand so far in 2020, and the situation is unlikely to improve significantly in the second half of 2020. This has caused significant disruption to the rebalancing of the shipping demand and supply (new ships) that had been taking place in the past few years,” the company’s bourse filing read, noting that according to Clarksons Research, the global fleet is expected to grow by 2.7%, while seaborne trade tonnage could decline by 5.1%1 in 2020.

“The weak sentiment globally and lack of visibility also make it very challenging for shipowners to plan their new order placement,” the report later added.

Amidst these, the group said that it has secured new orders for seven vessels in Q1 with a total contract value of $508.05m (US$360m). In total, Yangzijiang said that it has an outstanding order book of $4.09b (US$2.9b) for 69 vessels as of 31 March.

“These orders will keep the group’s yard facilities at a healthy utilisation rate up to 2021 and provide a stable revenue stream for at least the next 1.5 years,” Yangzijiang stated.