Tue, Nov 07, 2017 - Page 12 News List

Shipbuilder offers bright outlook

By Ted Chen  /  Staff reporter

CSBC Corp Taiwan (台船) yesterday gave an upbeat earnings outlook as the global ocean shipping sector continues to recover from an oversupply-induced downturn that has also affected the shipbuilder heavily.

The nation’s only listed shipbuilder said that it would focus on building vessels under 2,999 twenty-foot-equivalent units (TEU) and larger than 10,000 TEU.

“We foresee improved demand for these two classes of vessels, as shipping lines have been adopting them in their North American routes,” CSBC president Tseng Kuo-cheng (曾國正) said at an earnings conference in Taipei.

The company is also to develop specialty vessels that command higher margins, such as semi-submersible heavy lift ships, as well as turbine installation vessels, which are needed to construct offshore wind farms, Tseng said, adding that the company has built eight specialty vessels of various types in its history.

However, Tseng said that while dry bulk shippers have seen a faster recovery in transport demand and freight rates than container shippers have, there is a time lag of one to two years before the renewed momentum might translate into a demand for new vessels.

The company has a backlog of 18 vessels worth about NT$16 billion that will keep its production facilities occupied until delivery in the first half of 2019 and the first quarter of 2020, Tseng said.

Meanwhile, in light of its accumulated losses of NT$4.8 billion over the first three quarters of this year, the company’s board of directors has approved a plan to cut its capitalization by 57.91 percent, or NT$4.31 billion, pending shareholders’ approval in a general assembly next month.

To offset the accumulated losses, the company is seeking funding from its business partners through a private placement of no more than 200 million new shares, the company said.

The company, which is 42-percent state owned, said that the government would not increase its stake and reverse progress made toward privatizing the shipbuilder.

Tseng attributed the losses to a persistent slump in new orders, while requests from cargo lines to delay deliveries have further deteriorated the company’s margins.

“We have also been very selective in taking on new contracts, as offer prices quoted by shipping lines have become very low,” Tseng said.

The company is anticipating long-term revenue streams from shipbuilding and maintenance service contracts with the navy and coast guard, as well as from the government’s offshore wind farms.

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