CSSC fares well on healthy order book

China State Shipbuilding Co Ltd (CSSC), one of the largest shipbuilders in the country, said that its net profit in 2008 increased by 48.6% year-on-year to 4.16 billion yuan. The company’s revenue increased by 48% to 27.66 billion yuan, of which 21.44 billion yuan was from shipbuilding, 3.02 billion yuan from diesel engines and 2.63 billion yuan from ship repair, the Shanghai-listed company said in its annual financial report.

The company results come at a time when the shipbuilding industry is facing tough challenges arising from the sharp downturn in global trade. Dwindling cargo business has forced many shipping companies to delay deliveries of new ships. Some have gone even further by cancelling orders.

Chinese shipbuilders took the hit harder than their counterparts in other countries, mainly South Korea, since they specialize in the building of low-tech vessels such as bulk carriers, which face the biggest cuts in hard times. But the huge orders CSSC got during the boom times in past years have enabled it to weather the slump better than many of its competitors, analysts said.

In its latest report, CSSC said China’s shipbuilding industry grew rapidly before the third quarter of 2008. However, new orders declined sharply in the fourth quarter, which brought huge pressure to the industry.

CSSC said new shipbuilding orders are likely to slow during the first half of this year because of the depressed shipping industry and financing difficulties. The company plans to realize revenue of 29.51 billion yuan this year, including building 44 ships totalling 5.89 million DWT worth 23.6 billion yuan, 85 sets of diesel engines totalling 1.08 million kW worth 2.65 billion yuan and repairing 150 ships worth 2.2 billion yuan.