Subsidies keep Rongsheng Heavy Industries in black
Fewer orders and higher finance costs slash the mainland shipper's first-half earnings
China Rongsheng Heavy Industries, the mainland's largest shipbuilder in terms of order backlog, saw interim net profit for the six months ended June 30 plunge 82.3 per cent to 215.77 million yuan (HK$263.7 million), down from 1.22 billion yuan in the same period last year.
Chief financial officer Sean Wang Shaojian said the shipbuilder received 670 million yuan in government subsidies in the first half of the year. Without this cash, it would have made a net loss.
Wang said the subsidies represented "long-term sustainable income as long as we contribute to the local and domestic economies".
The decline in profitability was also affected by an increase, to 567 million yuan, in finance costs after total short- and long-term borrowing rose to 28.66 billion yuan.
Revenue dropped 37.2 per cent to 5.46 billion yuan, down from 8.7 billion yuan in the first six months of last year.
Chief executive Chen Qiang said: "Our results are more or less in line with what the rest of the industry is achieving right now."
Reflecting the slump in the mainland shipbuilding industry, Rongsheng won orders valued at US$58 million for two Panamax vessels in the first half, against US$1.09 billion worth of contracts secured between January and June last year.