Yangzijiang's net profit sank 36% to $92.7m in Q1

Shipbuilding revenue and interest income both dropped.

Mainboard-listed Yangzijiang Shipbuilding reported a 36% year-on-year drop in net profit to $92.7m (RMB448m) in Q1,

The group's shipbuilding revenue dropped 13% as vessels delivered during the quarter were relatively smaller in terms of vessel size, while interest income from the group's held-to-maturity assets were also lower due to the reduced investment portfolio size.

The group's gross profit margin remained stable at 23%, while other shipbuilding related businesses sank into a loss.

According to a report by OCBC, Yangzijiang faced eight vessel cancellations during the quarter. This indicates that the group will be unable to beat the tide of contract cancellations which has gripped the shipbuilding industry, although it has been faring relatively well compared to its peers.

“Not immune to the poor industry dynamics, eight bulk carrier orders were cancelled in 1Q16 (customers mainly US funds). The group has been faring relatively well compared to its peers, but it is also hard to beat the tide. On its part, YZJ, which is known for its effective cost control, has cut senior management salary by 20%, and laid off about 5% of its labour force,” OCBC said.