CSBC Corp, Taiwan (台灣國際造船) yesterday reported net losses of NT$965 million (US$33.46 million) in the first three quarters, 21 percent larger than net losses of NT$795 million last year, due to delays in the delivery of raw materials during the COVID-19 pandemic and the appreciation of the New Taiwan dollar against the US dollar.
While cumulative revenue increased 69.1 percent year-on-year to NT$19.64 billion for the first nine months of this year, CSBC’s costs expanded 69.7 percent to NT$20.37 billion, resulting in a gross loss of NT$733 million, up 87 percent from a gross loss of NT$391 million last year, the shipbuilder told an investors’ conference in Taipei.
“It was not a rosy performance,” CSBC president Tseng Kuo-cheng (曾國正) said. “Our construction work was seriously affected by delays in raw material deliveries during the pandemic and many of our foreign engineers could not come to Taiwan as scheduled.”
Photo: Kao Shih-ching, Taipei Times
Earlier this year, the firm had needed to import some materials from Wuhan, China, but transportation at the epicenter of the pandemic was completely halted due to lockdown measures, Tseng said.
“A delay in building one vessel had a domino effect on the construction of other vessels, as we have limited docking capacity,” he said.
The company calculates its revenue based on construction progress, so delays slowed revenue growth and increased operating costs, Tseng added.
The company was also hurt by a strong NT dollar, as most commercial shipbuilding contracts are denominated in US dollars and commercial shipbuilding makes up 30 percent of CSBC’s total sales, Tseng said.
CSBC had forecast that the exchange rate to the US dollar would stay at about NT$30.5, but the NT dollar’s unexpected appreciation to NT$28.5 is expected to cost the company NT$400 million in revenue, he said.
“Most of our orders have fixed prices,” CSBC executive vice president Mike Chou (周志明) said. “We tried to include in contracts that the price would be adjusted based on fluctuations in the exchange rate, but few buyers were willing to accept that, as no one likes to take on foreign-exchange risks.”
To avoid delays in raw materials, CSBC has diversified imports of raw materials, as it does not seem like the pandemic will slow down anytime soon, Tseng said.
For next year, the company plans to further reduce the number of commercial shipbuilding contracts — which have a low margin — to 22 percent of total revenue, CSBC chairman Cheng Wen-lon (鄭文隆) said, adding that the reduction would allow the company to focus on high-margin orders, such as 2,800 twenty-foot equivalent unit container vessels.
“To regain momentum, the company will focus more on government projects, such as military vessels, and offshore marine construction,” Cheng said.
The company has gained government approval to issue 450 million new shares, an injection of NT$7 billion, boosting its paid-in capital to NT$10 billion, he said.
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