Singamas posts 60% fall in '06 earnings
The world's No 2 shipping container maker, Singamas, hopes to sell 20 per cent more containers in 2007, after capacity increased by about half to 1.25 million TEUs, a senior executive said on Wednesday.
Mr Teo: Singamas is busy filling orders up to May for 360,000 twenty-foot equivalent units
Shares of Singamas Container Holdings Ltd fell 4 per cent yesterday after a worse-than-expected 60 per cent slide in 2006 earnings.
Chief executive Teo Siong Seng said in an interview the company is busy filling orders up to May for 360,000 twenty-foot equivalent units (TEUs),
That's more than three-fifths the volume of containers it cranked out in 2006. For 2007, the firm hopes to sell 700,000 TEUs of containers, helped by capacity growth and a shift towards higher-value products. That's still only about half what its bigger rival, Shenzhen-based China International Marine Container (Group) Co, sold in 2006 - about 1.35 million TEUs.
'We were very stretched last year with new plants and new products and we were not doing very well,' Mr Teo, also the managing director of Singamas' Singaporean holding firm, Pacific International Lines (Pte) Ltd, said.
Singamas earned a net profit of US$18.1 million for the year ended Dec 31, lagging a forecast of US$26.48 million from 10 analysts polled by Reuters Estimates. It blamed the result on delays in gaining licensing for three new facilities in the Chinese cities of Ningbo, Tianjin and Huizhou. 'They, therefore, missed the peak season of the year,' Mr Teo said at Singamas' boardroom overlooking the city's picturesque Victoria Harbour.
The earnings slide in 2006 - coming off a record annual profit of nearly US$45 million in 2005 - was Singamas' first since the 51-year-old Mr Teo took up the helm in 1997. Before that, the company had been a perennial loss-maker.
Lower container prices and higher steel costs dragged Singamas' gross margin to about 8 per cent in 2006 from about 11 per cent in 2005. 'We are disappointed but we know the reasons why,' said Mr Teo, son of Singamas chairman Teo Woon Tiong. The company made 583,543 TEUs of containers in 2006, up 18.1 per cent.
It used a year's time to shift the Qingdao plant to new products, quicker than the normal of three to four years - but it also paid a price.
Singamas lost about US$10 million at that facility last year when it transformed its production line to allow for higher value US domestic containers and chassis.
'At least we got the recognition of customers. And we have orders for 4,000 chassis, against our annual capacity of up to 8,000 units,' he added.
But developing higher-margin products, such as chassis, US domestic containers and tank containers was the right move, Mr Teo argued.
'We will expand revenues from specialised containers, including reefers, to about one-third of the total in four to five years against 5 per cent last year,' he said. Singamas expects its profit margin to improve in 2007 as the shipping market looked better.
Mr Teo: Singamas is busy filling orders up to May for 360,000 twenty-foot equivalent units
Shares of Singamas Container Holdings Ltd fell 4 per cent yesterday after a worse-than-expected 60 per cent slide in 2006 earnings.
Chief executive Teo Siong Seng said in an interview the company is busy filling orders up to May for 360,000 twenty-foot equivalent units (TEUs),
That's more than three-fifths the volume of containers it cranked out in 2006. For 2007, the firm hopes to sell 700,000 TEUs of containers, helped by capacity growth and a shift towards higher-value products. That's still only about half what its bigger rival, Shenzhen-based China International Marine Container (Group) Co, sold in 2006 - about 1.35 million TEUs.
'We were very stretched last year with new plants and new products and we were not doing very well,' Mr Teo, also the managing director of Singamas' Singaporean holding firm, Pacific International Lines (Pte) Ltd, said.
Singamas earned a net profit of US$18.1 million for the year ended Dec 31, lagging a forecast of US$26.48 million from 10 analysts polled by Reuters Estimates. It blamed the result on delays in gaining licensing for three new facilities in the Chinese cities of Ningbo, Tianjin and Huizhou. 'They, therefore, missed the peak season of the year,' Mr Teo said at Singamas' boardroom overlooking the city's picturesque Victoria Harbour.
The earnings slide in 2006 - coming off a record annual profit of nearly US$45 million in 2005 - was Singamas' first since the 51-year-old Mr Teo took up the helm in 1997. Before that, the company had been a perennial loss-maker.
Lower container prices and higher steel costs dragged Singamas' gross margin to about 8 per cent in 2006 from about 11 per cent in 2005. 'We are disappointed but we know the reasons why,' said Mr Teo, son of Singamas chairman Teo Woon Tiong. The company made 583,543 TEUs of containers in 2006, up 18.1 per cent.
It used a year's time to shift the Qingdao plant to new products, quicker than the normal of three to four years - but it also paid a price.
Singamas lost about US$10 million at that facility last year when it transformed its production line to allow for higher value US domestic containers and chassis.
'At least we got the recognition of customers. And we have orders for 4,000 chassis, against our annual capacity of up to 8,000 units,' he added.
But developing higher-margin products, such as chassis, US domestic containers and tank containers was the right move, Mr Teo argued.
'We will expand revenues from specialised containers, including reefers, to about one-third of the total in four to five years against 5 per cent last year,' he said. Singamas expects its profit margin to improve in 2007 as the shipping market looked better.
