Higher margin containership newbuilding orders have helped boost fourth quarter profit at Yangzijiang Shipbuilding, despite a fall in revenue.
China’s largest privately-owned shipbuilder saw net income increase 17% year-on-year to CNY 798.2m ($123.5m) despite revenue falling 38% to CNY 2.9bn.
The group’s shipbuilding business registered a gross profit margin of 24% for the fourth quarter versus the 12% seen a year ago, mainly due to the construction of more containerships with higher margins.
Yangzijiang said the Covid-19 pandemic had caused “major uncertainties” for the shipping industry in 2020, weighing on shipowners’ sentiments and leading to a “depressed shipbuilding market”.
Orders for 738 vessels were placed globally in 2020, a decline of 40.7% compared to 1,245 vessel orders placed a year ago, according to Clarksons.
In deadweight terms, the volume of newbuilding orders declined 29% to 53.9m-dwt in 2020 compared to 79m-dwt in 2019, Yangzijiang said.
“This is weaker comparison to 2016 when the shipbuilding market bottomed-out and recorded newbuilding orders of 30.07m-dwt for 768 vessels,” it said.
Despite the decline of new shipbuilding orders in 2020, Yangzijiang said market demand and sentiment improved towards the end of 2020.
Improved market sentiment
Yangzijaing’s new order wins in the fourth quarter of 2020 reached $1bn, which was more than half the total number of orders of 54 ships worth $1.8bn clinched in the whole year.
New orders consisted of one capesize bulker, a single kamsarmax bulker, two 59,000-dwt units and two 690-feu deck carriers.
Containership orders included two 24,000-teu vessels, five 3,500-teu boxships, one 2,700-teu vessel, six 2,600-teu units, four 2,400-teu ships and two 1,800-teu federships.
“These order wins in a tumultuous year are a testament to the group’s track record in building innovative, high-quality vessels and its commitment for timely deliveries,” Yangzijiang said.
At the end of the year Yangzijiang’s outstanding order book stood at 83 vessels worth $3.09bn, which will keep the group’s yards busy for the next 18 months.
Since the beginning of 2021, Yangzijiang said it has maintained its order win momentum securing shipbuilding contracts for 29 vessels worth $1.3bn.
“As the demand and orders placed for containerships surged on the back of a global container shortage and multi-year high spot container freight rates, the majority of orders were placed for containerships,” it said.
Several Singapore analysts have forecast that Yangzijiang is set to haul in newbuilding orders worth up to $3bn this year.
Analysts expect more containership orders to flow through in the first half of 2021 and potentially bulk carrier orders in the second half of the year
