Shipbuilding and dry bulk shipping group Cosco Corporation (Singapore) Limited said it expects a significant net loss in the fourth quarter of 2015.
Cosco said that the loss is expected mainly due to the continuing depressed state of crude oil prices, which has had an adverse impact on the global offshore marine industry.
Additional reasons for the expected loss are the slump in the shipbuilding market, which has negatively impacted the company’s shipyards, and the languid dry bulk shipping market, which has brought great pressures to their dry bulk fleet operations.
According to Cosco, as a result of adverse market conditions, the company’s shipyards incurred writedowns of certain inventory and provisions for impairment of trade receivables for certain contracts in fourth quarter ending 31 December 2015, which are deferred or may potentially be cancelled.
Cosco said it will disclose the details of their financial performance in its full year 2015 results, which are scheduled to be released in February 2016.
In the third quarter of 2015, Cosco posted a USD 82.1 million net loss. The group’s turnover decreased 18.1 percent to USD 949.6 million in Q3 2015 from USD 1.2 billion in Q3 2014 owing to decreases in shipyard and shipping revenues.
Turnover from shipyard operations decreased 17.8 percent to USD 939.9 million in Q3 2015 from USD 1.1 billion in Q3 2014 on lower revenue contribution from marine engineering, partially offset by an increase in revenue from ship building and ship repair segment.
Cosco’s turnover from dry bulk shipping and other businesses decreased by 34.9 percent from USD 14.9 million in Q3 2014 to USD 9.7 million in Q3 2015 amid lower short-term rates.
The group registered gross loss for Q3 2015 of USD 10.7 million, as compared to gross profit of USD 56.7 million in Q3 2014.