CSBC Corp, Taiwan (台灣國際造船), the nation’s only listed shipbuilder, yesterday said it would pursue government contracts for military vessels to weather the current economic downturn.
Last month, president-elect Tsai Ing-wen (蔡英文) reaffirmed her policy direction on building indigenous naval vessels during a visit to Kaohsiung, home of the nation’s leading shipbuilders, including CSBC.
Following a year of development at the United Ship Design & Development Center (聯合船泊設計發展中心), the Republic of China Navy last month posted an announcement marking the first step toward the launching of a new 16,000-tonne amphibious transport dock, a vessel designed to transport and embark on landing elements for expeditionary warfare missions.
The navy has set its sights on building the new amphibious transport dock in 2018, while commencing work on a 18,000-tonne amphibious transport capable of serving as a base for helicopters in 2022 to bolster its operations in the South China Sea, despite objections from the US, military experts said.
While the company is optimistic about winning the navy contracts, it remains cautious of challenges ahead.
“Military contracts have a much higher procurement cost, and the company must also fulfill stringent specifications, cost and delivery terms,” CSBC president Chen Lie-lin (陳豊霖) told a media gathering in Taipei.
The focus on minimizing costs and low tolerance for setbacks during the prototyping phase is also not very conducive toward development, Chen said, adding that companies specializing in freighters such as CSBC need more opportunities to gain experience in building military vessels.
“The maritime industry is facing unprecedented challenges, including a persistent glut in freight capacity and slowing global trade, leading to falling freight rates and demand for new vessels,” CSBC chairman Robert Lai (賴杉桂) said.
Shipbuilders across the world have also began slashing prices in a bid to snap up rapidly declining demand for new vessels, making viable contracts scarcer, Lai said.
“These market conditions are expected to continue worsening this year as well as next year,” Chen said.
“To differentiate ourselves from competitors, we have shifted our focus toward contracts for vessels with higher technical requirements,” Chen said.
The company said that as of the end of last month, its order backlog was 26 freighters worth about NT$40 billion (US$1.24 billion), which are due to be delivered by 2018.
The company is likely to deliver 11 freighters this year, Chen said.
In the first three months of the year, CSBC’s revenue fell 21.59 percent to NT$4.55 billion from the same period last year.
Last year, the company saw revenue drop 15.84 percent to NT$21.46 billion from 2014, but net income rose 4.19 percent to NT$473 million, thanks to sound management of costs and favorable foreign-exchange movements.
Earnings per share were NT$0.63 last year. The company’s board of directors has approved plans to distribute a cash dividend of NT$0.5 per share.
The company’s shares fell 0.96 percent to close at NT$15.45 in Taipei trading yesterday, Taiwan Stock Exchange data showed.
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