A tale of two shipyards

Chinese shipbuilders Cosco Corp and Yangzijiang Shipbuilding seem to be operating on different planets following recent reports of sharply contrasting earnings.

Higher operational costs and a generally tough trading environment dented Cosco’s profits and resulted in an 80% slump to $22.3 million from the same period a year ago.

Turnover fell 24% to $752 million, as it repaired and built fewer ships and lower charter-hire rates took a toll on its dry bulk shipping business. Jiang Li Jun, Cosco’s vice-chairman and president, admitted that the road to recovery remained “bumpy with little solid evidence of a sustainable growth in sight”. Cosco also warned that it expects earnings for the year to be ‘substantially lower’ than 2008.

On the other hand, Yangzijiang’s earnings for the first nine months at 1.6 billion yuan had already surpassed that of the whole of last year. Net profit for the third quarter rose 17% to 554.2 million yuan, while revenue climbed 28% from 2.02 billion yuan to 2.59 billion yuan.

The smaller of the two shipbuilders said it is on track to deliver a total of 40 vessels this year as scheduled and the remaining 10 vessels are in the final stages of construction.