CSBC Corp, Taiwan (台船) yesterday reported a pretax profit of NT$34 million (US$1.2 million) for last quarter, ending five consecutive quarters of losses.
The turnaround could be attributed to cost improvements and lower foreign exchange volatility, a CSBC official told the Taipei Times by telephone.
Although the shipbuilder’s revenue fell 17.65 percent annually to NT$4.52 billion in the first quarter, its costs dropped at an even faster rate, thanks to production improvements at its two plants in Keelung and Kaohsiung.
Photo courtesy of CSBC Corp, Taiwan
As a result, its gross margin returned to positive territory last quarter, the official said.
Last year, it reported a gross margin of minus-5.57 percent as its cost of goods sold exceeded total sales, company data showed.
Aside from cost reductions, the appreciation of the New Taiwan dollar against the US dollar moderated in the first quarter compared with a year earlier, resulting in lower foreign-exchange losses, CSBC said.
As most orders CSBC obtained from shippers, such as Yang Ming Marine Transport Corp (陽明海運), to build commercial vessels are denominated in the greenback, the local currency’s appreciation affects its revenue significantly, the official said.
Last quarter, CSBC delivered a new vessel with capacity of 2,800 twenty-foot equivalent units to Yang Ming, and plans to deliver another two vessels by the end of this year, the official said.
“The revenue generated from the US dollar-denominated vessels orders would account for a smaller share of our total sales by the end of this year, as we are shifting our focus to military vessels for the Ministry of National Defense and marine constructions for offshore wind farms,” the official said.
As a result, foreign-exchange rate volatility is expected to have a weaker impact on CSBC’s sales going forward, the official said.
Revenue from orders from the ministry accounted for 60 percent of the company’s total sales in the first quarter, while those from the commercial vessels and marine constructions accounted for the remaining 40 percent, CSBC said.
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