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15
Annual Report 2013
DEAR SHAREHOLDERS,
I am pleased to deliver my first report as Chairman for
the financial year ended 31 December 2013.
It has been another challenging year for COSCO
Corporation. Operating conditions for most of 2013
continued to be difficult. The Group’s turnover was
$3.5 billion, lower by 6% from $3.7 billion for the
year before. Gross profit amounted to $321 million,
from $485 million in 2012. Net profit attributable
to shareholders was $30.6 million, a decline of 71%.
Diluted earnings per share was 1.4 cents. Group net
asset value per ordinary share as at 31 December
2013 was 59.7 cents.
Tremendous efforts were made during the year to
control cost and execute projects more effectively
under more difficult conditions. As the new
construction projects executed during 2013 were
from contracts secured two years before, at a time
when the shipping market was depressed, some
margins were understandably lower. Similarly, cost
pressures had also negatively compressed the
margins in our offshoremarine engineering contracts.
OFFSHORE MARINE ENGINEERING CONTINUES TO BE
MAJOR CONTRIBUTOR
Shipyard operations continued to be the major
contributor to overall turnover, at 98.4%. The offshore
marine engineering segment accounted for 70% of
the shipyard turnover.
During the year under review, a total of 24 projects
were completed and delivered. They included one
jack-up barge, one transportation barge, one Sevan
650 ultra deep-water cylindrical drilling rig, two
tender rigs, two livestock carriers and 17 bulk carriers.
COSCO’s ship repair business continued to perform
above industry level, as it maintained its leadership
in the China market. During the year, this segment
contributed 10% to total shipyard revenue.
AN IMPROVED 2013 ORDER BOOK
Despite the difficult market conditions, COSCO
secured US$3 billion worth of contracts in 2013
compared to US$2 billion for the year earlier, including
repeat orders for the offshore marine segment. The
Group’s order book as at 31 December 2013 stood at
US$7.8 billion.
Neworders received in 2013 covered 41 product units,
compared to 24 for the year before. They include one
semi-submersible tender assist drilling rig, one semi-
submersible accommodation rig, one LNG vessel, one
float-over launch barge, one stinger barge, one cargo
and training ship, two floating accommodation units,
two salvage lifting vessels, two module carriers, three
semi-submersible accommodation vessels, four jack-
up drilling rigs, five oil tankers, seven bulk carriers and
10 platform supply vessels.
The offshore marine engineering segment added 23
new projects to the order book in 2013, compared to
19 in the previous year. The order book at the end
of the financial year features a wide range of offshore
marine engineering and ship building projects,
including bulk carriers, oil tankers, livestock carriers,
module carriers, salvage lifting vessels, LNG carrier,
cargo and training ship, Sevan 650 deep-water drilling
unit, FPSO, semi-submersible accommodation rigs
and vessels, stinger barge and tender barges, float-
over launch barge, wind turbine installation vessel,
pipe-laying vessels, LeTourneau Super 116E jack-up
drilling rigs, tender rigs and platform supply vessels.
MARKET CONDITIONS REMAIN CHALLENGING
Much has been reported in media about the
improvement in world economic conditions since the
second half of 2013, with sentiments indicating that
growth should increase over the next two years.
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