Shipbuilder Rongsheng sinks deeper in losses

Rongsheng's 3b yuan loss in first half bucks recovery trend among mainland competitors

PUBLISHED : Friday, 29 August, 2014, 11:44am
UPDATED : Saturday, 30 August, 2014, 1:07am

China Rongsheng Heavy Industries, one of the mainland's largest privately owned shipbuilders, sank deeper into loss despite a budding recovery in the shipping market that helped recoup losses for companies like China Cosco and China Shipping Container Lines (CSCL).

Rongsheng reported first-half net loss more than doubled from a year ago to three billion yuan (HK$3.77 billion) and revenue plummeted 78.4 per cent to 340.6 million yuan as orders dried up. The shipbuilder delivered five vessels and cancelled eight contracts in the reporting period.

Rongsheng shares were suspended from trading yesterday, pending release of information related to its restructuring.

Its liquidity woes appear to be numerous. As of June 30, it had 262 million yuan in bank borrowing overdue, and had breached financial covenants of another 609.2 million yuan in loans.

"The group is seeking a waiver for this borrowing and has obtained preliminary consent from the relevant bank," Rongsheng said.

Meanwhile, CSCL, the world's seventh-largest container shipping line by fleet size, returned to the black with a net profit of 431.6 million yuan, boosted by disposal gains on its terminals. Gross loss narrowed 86.4 per cent to 116.2 million yuan while revenue rose 8.5 per cent year on year to 17.4 billion yuan.

Shipping volume remained flat at 3.95 million twenty-foot equivalent units.

CSCL, a subsidiary of state-owned China Shipping (Group), said in a statement that the shipping industry is still facing uncertainties as oversupply continues to squeeze freight rates.

"In view of the numerous uncertainties, it is too early to say that the overall situation is optimistic for the shipping industry," it said.

China Cosco, the flagship listed unit of China Ocean Shipping (Group), also narrowed first-half losses by 45.7 per cent from a year ago to 2.28 billion yuan.

Revenue rose 4.6 per cent to 32.49 billion yuan in the six months to June 30.

China Cosco's dry bulk fleet, the largest in the world, reported 710.2 million yuan in operating loss. The container fleet, the fifth largest in the world, posted 868.6 million yuan in operating loss.