Only the fittest shipbuilders to survive downturn

Headquartered in Germany, DVB Bank AG predicts that the next several years will be tough for shipbuilders across the world and only the fittest would survive.

Geir Sjurseth, the managing director and global head of offshore for the lender that specializes in transport finance, said majority of the maritime companies in the Middle East would endure the impact of the global financial crisis and downturn this year but the outlook for 2010 was far more uncertain.

“The end of this year and into 2010 is expected to see record shipping losses hit banks,” Sjurseth said at the recent Middle East Workboat Conference in Abu Dhabi. “While stock markets have bounced and the signs of an economic upturn have become visible, the banks are still underwater and are likely to remain so for another two or three years.

“The well-established players that survive will have a fantastic future. While the mood of Middle East maritime industry is upbeat compared with many other regions in the world, the next few years will be a case of survival of the fittest.??

“The strong companies will preserve capital, cut costs and the smartest guys are planning how to benefit in the longer term. When the dust finally settles, the outlook is favourable but before that we are likely to see defaults and consolidation among highly leveraged, recent entrants in the market.”