Tue, Apr 23, 2013 - Page 13 News List

CSBC aims for 20 percent reduction in production costs

By Crystal Hsu  /  Staff reporter

CSBC Corp, Taiwan (CSBC, 台灣國際造船) aims to cut production costs by 20 percent and increase non-core operations to 20 percent of its total operations in the next five years, as the nation’s biggest shipbuilder seeks to improve its financial performance, top executives said yesterday.

“We aim to bring down shipbuilding costs by 20 percent in the next five years,” in keeping with a five-year development plan the company’s board approved last year, CSBC chairman Robert Lai (賴杉桂) told a press conference.

To that end, the state-run company plans to negotiate better prices with supply chain partners, especially China Steel Corp (中鋼). CSBC buys about 200,000 to 300,000 tonnes of steel plates from the nation’s only integrated steelmaker each year.

OVERSUPPLY

The goals are achievable in light of falling steel plate prices in recent years due to oversupply and lackluster demand, Lai said.

Currently, steel plates cost NT$22,000 per tonne, down from NT$27,500 in 2009, CSBC said, as China’s sustained attempts to cool its property sector constrain demand, CSBC executive vice president Mark Chueh (闕傑) said.

The shipbuilder, in which the Ministry of Economic Affairs holds a 40 percent stake, posted NT$214.9 million (US$7.2 million) in pre-tax income for the first quarter, after the global slowdown dampened net profit last year to NT$706.64 million, or NT$0.95 in earnings per share, the lowest since 2005, company data showed.

CORE BUSINESSES

The company also plans to increase revenue contributions from its non-shipbuilding operations to 20 percent in the next five years from less than 10 percent, to expand core businesses and support government policies, Lai said.

Apart from building vessels, CSBC also constructs shipbuilding and marine structures and provides rust and erosion control services for customers.

“We will introduce a healthy dose of innovation to strengthen the company’s business model in the hope it turns a profit every year,” Lai said.

CSBC shares ended flat at NT$19.1 yesterday, underperforming the TAIEX’s 0.5 percent rise, Taiwan Stock Exchange data indicated.

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