Keppel shipbuilding firm Q2 profit down by 63%
Ship builder Keppel Philippines Marine Inc. (KPMI) reported a slower net profit for the second quarter as a result of the global economic slowdown, and the Singaporean-owned company warned this situation may persist for the rest of the year.
In its report to the Philippine Stock Exchange, KPMI said it posted a net profit of P68.97 million for the second quarter, a 63-percent decline from the previous year’s P186.32 million. The company operates three yards—Keppel Batangas Shipyard Inc. (KBSI), Keppel Cebu Shipyard Inc. (KCBI) and Subic Shipyard & Engineering Inc.
The company also warned that the decline in earnings could continue for the next two quarters based on the present economic situation. “Although enquiries [for ship repair and ship building] are still high, [but] stiff competition is expected from Chinese yards. The company will also pursue new building, fabrication and conversion jobs,” the company said.
Revenues for the period were only at P604.7 million, more than 39-percent lower compared with last year after the company said it had lower ship building and fabrication activities for the period mainly as a result of the shut down of its Cebu facility.
“However, due to the downturn in the shipping and offshore industry because of the global economic crisis, KCBI has suspended shipbuilding operations starting the second quarter of 2009,” the company said in a report.
KPMI also “significantly reduced” the Cebu unit’s workforce in June after the company decided to shift its focus from ship repair to building new ones, while customers for ship repair will be referred to KBSI.
“With the decline in freight rates and slowdown in the shipping industry, the ship repair business is subject to slowdown. However, the company will capitalize on its good relations with customers and continue to preserve and make gains on its market share and look for other type of marine-related work to broaden the base load,” it added.
For the first half of the year, the company already posted earnings of P229.61 million, down 28 percent from the previous year’s P321.45 million.
Yeo Chien Sheng Nelson, the company’s chairman, earlier said its remaining workers in Cebu were asked to go on leave until such time when they secured an order.
“If you are a ship owner with so many yards to choose [from] and you have a yard that everyday you read on the newspaper that there’s going to be an impending strike or has a problem with the union, would you want to keep the job to that yard?,” the executive said.
Fabrication activities carried out by KBSI have also decreased with only one project ongoing compared with four in the previous year.
Overall, ship repair revenues contributed 42.3 percent of total sales revenues while shipbuilding and fabrication contributed 57.7 percent.
The company’s operating loss of P4.5 million for the period was due mainly to lower sales revenue of the group for the second quarter as well, as redundancy and separation cost incurred by KCBI.
Investment and net interest income dropped from P34.8 million in 2008 to P4.6 million in 2009 due mainly to foreign exchange losses for the period.
In its report to the Philippine Stock Exchange, KPMI said it posted a net profit of P68.97 million for the second quarter, a 63-percent decline from the previous year’s P186.32 million. The company operates three yards—Keppel Batangas Shipyard Inc. (KBSI), Keppel Cebu Shipyard Inc. (KCBI) and Subic Shipyard & Engineering Inc.
The company also warned that the decline in earnings could continue for the next two quarters based on the present economic situation. “Although enquiries [for ship repair and ship building] are still high, [but] stiff competition is expected from Chinese yards. The company will also pursue new building, fabrication and conversion jobs,” the company said.
Revenues for the period were only at P604.7 million, more than 39-percent lower compared with last year after the company said it had lower ship building and fabrication activities for the period mainly as a result of the shut down of its Cebu facility.
“However, due to the downturn in the shipping and offshore industry because of the global economic crisis, KCBI has suspended shipbuilding operations starting the second quarter of 2009,” the company said in a report.
KPMI also “significantly reduced” the Cebu unit’s workforce in June after the company decided to shift its focus from ship repair to building new ones, while customers for ship repair will be referred to KBSI.
“With the decline in freight rates and slowdown in the shipping industry, the ship repair business is subject to slowdown. However, the company will capitalize on its good relations with customers and continue to preserve and make gains on its market share and look for other type of marine-related work to broaden the base load,” it added.
For the first half of the year, the company already posted earnings of P229.61 million, down 28 percent from the previous year’s P321.45 million.
Yeo Chien Sheng Nelson, the company’s chairman, earlier said its remaining workers in Cebu were asked to go on leave until such time when they secured an order.
“If you are a ship owner with so many yards to choose [from] and you have a yard that everyday you read on the newspaper that there’s going to be an impending strike or has a problem with the union, would you want to keep the job to that yard?,” the executive said.
Fabrication activities carried out by KBSI have also decreased with only one project ongoing compared with four in the previous year.
Overall, ship repair revenues contributed 42.3 percent of total sales revenues while shipbuilding and fabrication contributed 57.7 percent.
The company’s operating loss of P4.5 million for the period was due mainly to lower sales revenue of the group for the second quarter as well, as redundancy and separation cost incurred by KCBI.
Investment and net interest income dropped from P34.8 million in 2008 to P4.6 million in 2009 due mainly to foreign exchange losses for the period.
