COSCOCorporation faced tremendous headwinds
during the year under review as sliding oil prices
coupled with slowing global economic growth
strongly impacted many businesses.
Overcapacity and unceasing rising costs had made
it even more challenging for shipyard operators to
achieve the desired bottom line. Most of the players
in the offshore marine and related industries have
not been able to escape unscathed from the oil
market debacle.
Increasingly severe market conditions have forced
some of our customers to delay delivery or cancel
orders, and strongly impacted our business
operations. Global surplus of shipyard capacity
vying for fewer projects and greater competition
meant that new contracts were also secured with
lower margins.
Group turnover for the year under review declined
17.4 per cent to $3.5 billion from $4.3 billion in the
previous financial year. The Group suffered a gross
loss of $214.8 million in FY2015 from gross profit
of $291.0 million in FY2014. Higher administrative
and finance costs also contributed to a net loss
(attributable to equity holders of the Company) of
$570 million compared to net profit of $20.9 million
for the previous year.
The significant net loss is mainly attributable to the
continuing depressed state of crude oil prices that
has severely affected the global offshore marine
industry, the slump in the shipbuilding market that
has negatively impacted the Company’s shipyards;
and the languid dry bulk shipping market that has
put great pressure on the Company’s dry bulk fleet
business.
In the light of the poor market conditions, substantial
write-downs of inventory and provisions for
impairment of trade receivables for contracts,
which are deferred or may potentially be cancelled,
have been made.
DELIVERIES AND NEW ORDERS DESPITE
DOWNTURN
In the year under review, shipyard operations
contributed to 98.9 per cent of revenue. 60.7 per
cent of the shipyard revenues were derived from
offshore marine projects.
Massive cost cutting measures from the oil majors
had plagued the entire value chain in the oil industry,
driving many operators and builders into severe
difficulties. Against this challenging backdrop, we
delivered a total of 21 projects, comprising nine
bulk carriers, six platform supply vessels, two
semi-submersible accommodation vessels, two
anchor handling tug supply vessels, one floating
accommodation unit and one oil tanker.
Global order book for newbuilds declined
significantly in 2015. In spite of the declining
operating environment, we managed to secure
US$820 million of new orders in 2015 compared
to US$1.6 billion a year ago.
DEPRESSED MARKETS,
UNCERTAIN PROSPECTS
2015 saw continued turbulence in the global
economy following the slowdown in the emerging
economies, volatility in the financial markets, and
the further slide in oil and other commodity prices
that severely impacted our business.
Dear Shareholders
Key Messages
15
COSCO Corporation (Singapore) Limited
Annual Report 2015
