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COSCO Corporation (Singapore) Limited
GROUP
FINANCIAL REVIEW
OVERVIEW
The Group achieved net profit attributable to equity
holders of $30.6 million on turnover of $3.5 billion
in 2013.
TURNOVER
Group turnover decreased 6.1% to $3.5 billion in
2013 from $3.7 billion in 2012 owing to a decrease
in shipyard revenue.
In 2013, turnover from shipyard operations
decreased by 6.1% to $3.5 billion from $3.7 billion
in 2012. This was due to lower revenue contribution
from the ship repair and ship building which more
than offset the growth in revenue from marine
engineering.
The Group successfully delivered 17 bulk carriers in
2013. Of these, COSCO Zhoushan shipyard delivered
six bulk carriers, COSCO Dalian shipyard delivered
six bulk carriers and COSCO Guangdong shipyard
delivered five bulk carriers. Additionally, COSCO
Nantong shipyard delivered two tender rigs, COSCO
Guangdong shipyard delivered two special purpose
carriers and COSCO Qidong shipyard delivered one
ultra deep-water cylindrical drilling rig and two
barges.
Turnover from dry bulk shipping and other
businesses increased marginally by 3.6% from $53.7
million in 2012 to $ 55.6 million in 2013.
The BDI started the year 2013 at 698 points and
ended the year at 2,277 points. The BDI averaged
1,206 points for FY2013, which is a 31.4% increase
from the average of 2012 of 918 points. The BDI
increase was driven mainly by stronger demand in
the Capesize dry bulk carrier sector and our dry bulk
shipping fleet comprises Handymax and Panamax
carriers.
Shipyard business remained the biggest revenue
contributor, forming 98.4% of Group turnover in 2013.
PROFITABILITY
Gross profit decreased 33.8% from $484.9 million in
2012 to $321.2 million in 2013 mainly due to higher
inventory write-downs and provision for expected
losses recognised on construction contracts which
resulted in lower profit contributions from ship
building and offshore marine engineering.
Other income comprised gain from the disposal of
scrap metal, interest income, net currency exchange
gain/(loss) and others. Compared to 2012, other
income decreased by 10.1% to $110.1 million in
2013 mainly due to lower sales value of scrap and
exchange loss of $18.9 million (2012: exchange gain
of $0.7 million) which were partially offset by a one-
off compensation received from customers in FY2013.
The exchange loss of $18.9 million was mainly due to
the strengthening of the Chinese Yuan against the US
Dollar.
Distribution costs decreased by 19.1% to $66.5
million, owing to less marketing and promotional
activities.
Interest expense increased by 10.9% to $110.8 million
in 2013 due to higher bank borrowings deployed to
fund shipyard operations.
On 17 October 2013, the Group made an
announcement on the DP3 deepwater drillship
contract stating that the shipowner has served notice
of termination and submitted a request for arbitration
in London for which the shipowner claimed for
a refund of the first installment of the contract
amounting to US$110 million paid by the shipowner
Operat i ons and F i nanc i a l Rev i ew
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