PUM sees higher revenue

The Singapore-based shipbuilder, Pan-United Marine (PUM), said it expects to increase revenue and improve its operating margin in 2007 thanks to higher-value orders and a 50% jump in vessel deliveries.

The company’s two shipyards – one in Singapore and the other on the Indonesian island of Batam – were due to deliver nine vessels in 2007 and the same number in 2008, up from six in 2006, executive director Ng Sing Chan said last week. PUM builds a wide range of medium-sized, specialised ships such as cement carriers, livestock carriers, floating cranes and dredgers. As oil prices surged in the past two years, it has won more orders for vessels that support offshore oil exploration.

Ng said the higher number of deliveries would result in higher revenue, while net profit would increase thanks to higher margins. PUM achieved a net operating margin of 16.5% in 2006, up from 14% in 2005. Operating margins would increase in 2007 as the company would realise most of the higher-value orders booked last year when a lack of yard space pushed up shipbuilding prices, he said.

“Most of the yards in Singapore will see their margins rising as the tight market last year allowed us to pick and choose orders that we thought would give us more in terms of absolute margins,” Ng said in an interview. PUM earlier this month reported a 142% surge in 2006 net profit before exceptional items, as full-year revenue rose 44%.

The yard recently won its first contract to convert an oil tanker into a floating production offloading and storage (FPSO) vessels. The FPSO order was placed by Norway’s Nortechs FPSO Pte Ltd which plans to develop another two FPSOs this year. To improve revenues further, Ng said the firm may spend about S$30 million of its S$140 million in cash reserves on upgrading its Indonesian shipyard.