First-quarter results at China Shipbuilding Industry Co Ltd (CSICL) were hit by high steel costs and rising expenses in research and development, even as the Shanghai-listed shipbuilder managed to stay in the black on one-off accounting gains.
Excluding all one-off items, CSICL posted net loss of CNY 535m ($79.4m) for January-March, compared with a net profit of CNY 255m during the same period of 2018.
Revenue amounted to CNY 6.07bn, little changed from the year-ago level.
In its quarterly report, CSICL reported falling gross margins due to rising steel, labour and logistics costs.
“The actual construction costs exceeded our original targets. That was squeezing our margins,” the company said.
Expenses in research and development reached CNY 92m, up 66.7% year-on-year.
“To enhance our core capability in innovation and upgrade our products continuously, we have put more resources into this area,” CSICL said.
Overall, the company posted net profit of CNY 529m in January-March, compared with net profit of CNY 274m in the year-ago period.
The bottom line was boosted by one-off accounting gains as CSICL no longer needed to report the results of loss-making subsidiary Dalian Shipbuilding Industry Offshore on a consolidated basis.
The offshore unit entered court-ordered restructuring due to debt issues in January.
As a result, investment gains of CSICL increased by CNY 990m from the year-ago level to CNY 1.04bn in the first quarter.
As the flagship unit of state conglomerate China Shipbuilding Industry Corp, CSICL owns some of the largest yards in China—including Dalian Shipbuilding Industry Co.
The company posted net profit of CNY 673m on revenue of CNY 44.5bn in 2018, compared with net profit of CNY 838m on revenue of CNY 38.8bn in 2017.
