Shipbuilder proves it can weather choppy economic waters

Despite the persistence of difficult conditions in the global shipping market, China Shipbuilding Industry Corp, one of the country's two biggest shipbuilding conglomerates and the Chinese navy's main contractor, recorded higher revenue and profits in 2012, the company said on Tuesday.

The company, which manufactured equipment used on China's first aircraft carrier, Liaoning, saw its 2012 revenue jump by 7.7 percent year-on-year to 175 billion yuan ($28.1 billion).

Its profits, meanwhile, increased more than 7 percent from a year earlier. The results came from the company's excellent performance amid a dull market, industry analysts said.

China Shipbuilding attributed the increases to its strategy of diversifying and adjusting its products.

To reduce its business risks, the company devoted more of its resources in 2012 to various non-marine products, such as equipment needed for offshore oil exploration and the generation of wind power.

"We will continue developing non-marine products, expanding into industries such as energy, transportation and logistics, and expanding our presence in the global market," said Sun Bo, China Shipbuilding senior executive.

"These products are likely to be the source of more than half of our sales revenue over the next few years."

Sun expressed little optimism for the shipping market.

"An upturn is unlikely to come in the next five years," he said. "Shipyards should brace themselves for persistent difficulties."

Last year was a rough one for the shipping industry, as surging fuel prices and a glut of vessels weighed on shipping companies' profits.

Shipyards have been subjected to a similar fate. Especially hard hit have been smaller yards, which often lack the technology needed to produce the sophisticated vessels sought in many new orders, analysts said.

The number of new orders declined. From January to November 2012, 17 million deadweight tons of new vessels were ordered from Chinese shipyards, half the amount for the same period a year earlier, according to the China Association of the National Shipbuilding Industry.

Losses have been widespread in the industry. During the first 10 months of 2012, the Chinese shipbuilding industry's revenue declined by 5 percent year-on-year to 41.3 billion yuan, according to the association.

China CSSC Holdings Ltd, the listed unit of the country's other leading shipbuilder, China State Shipbuilding Corp, said on Friday that it expects its net profit for 2012 to decline by more than 95 percent year-on-year.

The company's profit for the year's first three quarters was 546 million yuan, the lowest amount recorded for that period in three years.

For the entire previous year, the company had a net profit of 2.25 billion yuan.

The company blamed its financial woes on the global shipping industry's downturn.

According to data from the General Administration of Customs, the value of the country's vessel exports from January to November in 2012 declined by 8.1 percent year-on-year, falling to $36.6 billion.