CSBC Corp, Taiwan (CSBC, 台灣國際造船), the nation’s biggest shipbuilder, said profit may fall this year as it works through low-margin orders placed by government-owned companies during the global recession.
“There’s no money to be made from these contracts,” president Paul Tang (譚泰平) said in an interview in his Taipei office on Monday.
Orders for tankers from refiner CPC Corp, Taiwan (台灣中油) and for coal ships from Taiwan Power Co (台電) helped the shipyard weather the economic slowdown and a global slump in order, he said.
PHOTO: BLOOMBERG
An economic rebound has now revived demand with vessel prices rising at least 10 percent from the lowest point during the global recession, Tang said. Evergreen Group (長榮集團) and Neptune Orient Lines Ltd, Asia’s two largest container lines, both ordered new ships last month as US and European retailers boost purchases of Asian-made toys, furniture and auto-parts.
Production at CSBC, as measured by steel work, bottomed in the first half, Tang said. The shipbuilder, which has a yard in Kaohsiung and another in Keelung, is fully booked through the first half of 2013, he said.
“It looks like the market had reached its lowest point,” Tang, 64, said. “It’ll be clear in late [next year] or 2012 if the recovery stands.”
CSBC made an unaudited net income of NT$878 million (US$28 million) in the first seven months of the year, a stock exchange filing on Friday said. Last year, annual profit more than doubled to NT$2.46 billion. Profit this year will likely decline, Tang said, without elaboration.
Container ships account for more than 70 percent of CSBC’s output, Tang said. The company also builds bulk carriers and oil platforms, he said. Vessel prices fell at least 30 percent because of the global financial crisis, he said.
Shares of CSBC climbed 2.96 percent to NT$27.85 in trading yesterday. The stock has declined 8.99 percent so far this year, compared with a fall of 2.58 percent on the benchmark TAIEX.
“The container-shipping market is improving after having several bad years as the global economy recovers,” said Michael On (洪瑞泰), president of Beyond Asset Management Co (晉昂證券投顧). “Orders for new vessels may increase.”
Neptune Orient ordered as many as 12 container vessels from Seoul-based Daewoo Shipbuilding & Marine Engineering Co last month. The deal was valued at as much as US$1.2 billion order.
Evergreen Group ordered 10 vessels from Samsung Heavy Industries Co on July 2 as part of a plan to buy 100 ships. The Taipei-based line may order 12 container ships from CSBC, the Chinese-language Economic Daily News reported on July 3. Tang declined to comment on the report, citing a confidentiality agreement between the two companies.
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