Repairers still battling as new drydock opens

Jurong Shipyard Ltd, buffeted by intense competition from yards in the Middle East, sees no sign of a recovery in its profit from ship repair.

'Not yet,' said K.K. Tan, the shipyard's managing director, in response to a question about prospects for a rise in profit margins from the repair of oil tankers and other vessels. 'We've been at the bottom for some years now.' Mr Tan's comments came as he unveiled Jurong's new S$170 million (about HK$925 million) drydock, the largest such yard in Singapore.

The company is expanding its operations even after profits have fallen for three years and analysts say the ship repair industry seems poised to report its worst set of half-year results in more than five years.

The yards, a foundation of Singapore's maritime economy, have suffered from tougher competition and more capacity in the Middle East. Repair yards such as Jurong, Keppel Corp and Sembawang Corp have also been burdened by rising costs, including higher expenses for meeting environmental rules.

While ship owners are getting more for carrying cargo this year than last year, rates have not recovered enough to fuel a jump in business for yards such as Jurong.

'This is a cyclical business and our profits depend on the market,' Mr Tan said.

Jurong's profit for the six moths ended June 30 was expected to sink between 15 per cent and 20 per cent, said David Leow, an analyst at Kay Hian James Capel Pte.