News

02 May 2008

Cosco Corp. Singapore Ltd. aims to draw one third of its business each from ship repairs and conversion, new shipbuilding and offshore marine engineering services. The three key businesses contribute S$653.1 million (US$481.2 million) or 91 per cent of the company's S$717.6 million (US$528.8 million) revenue during the January to March quarter. Of the total revenue from the three key business segments, 21 per cent comes from ship repairs contracts, half of its 42 per cent share last year. The smaller revenue share from ship repairs business is in line with Cosco's move to secure higher value contracts in new shipbuilding and offshore marine engineering services, Cosco Vice Chairman and President Ji Hai Sheng said during a press briefing in Singapore.
Maintaining a balance between the three identified key earning pillars of ship repairs and conversions, offshore marine engineering and new ship building will serve to shield the company from an increase in competition among Chinese shipyards, parti ularly in ship repairs business, according to Ji.
Cosco drew 21 per cent of the S$653.1 million (US$481.2 million) revenue from offshore marine engineering services during the first quarter, up from 10 per cent during the same period last year. Revenue from conversion projects forms 39 per cent of the turnover from the three business segments, up from 31 per cent last year. During the first quarter, the company secured 13 per cent of this share of revenue from new shipbuilding business including construction contracts for oil rigs.
Cosco recently won a RMB923 million (US$131.8 million) contract to build the hull of an oil rig destined to operate for an American client in the U.S. Gulf of Mexico. The shipbuilder lost an earlier contract with Norwegian Red Flag A.S. as it is not able to deliver the client's new requirement for a turnkey project including a drilling package.
Ji said Cosco intends to build up its rig building capacity to address this shortfall in future, but declined to comment on the timeframe. Meanwhile, Cosco is undertaking an aggressive plan to increase its yard space at four locations in China - Dalian, Nantong, Zhoushan and Guangdong from the present 2.31 million square metres (24.9 million sq ft) to 3.45 million square metres (37.1 million sq ft) by 2010.
Ji also said the shipbuilder remains on schedule to deliver a floating storage offloading facility to MODEC International L.L.C. and the hull of a floating drilling production storage offloading vessel to MPF Corp. Ltd.