Colombo Dockyard in red as shipbuilding in deep waters

Colombo Dockyard PLC swung to a loss in the quarter ended December 31, 2019 (4Q19), as the firm’s shipbuilding operations lost money and the ship repairing business lost steam amid the escalation of costs.

Colombo Dockyard reported revenues of Rs.3.2 billion for the three months under review, down 34 percent from the same period a year ago. But the direct costs of the consolidated business rose by a steep 40 percent to Rs.2.64 billion.

The company, a unit of Japan’s Onomichi Dockyard, is engaging in shipbuilding, repairing, heavy engineering and material sales. 

While the shipbuilding operation has long been the leading revenue generator for the company, the ship repairing business overtook with higher revenues and profits in 2019. 

Global sea trade, competition, availability and talent and technology are critical success factors for the shipbuilding and repairing industry. 

Other incomes, which were Rs.451.6 million in the year earlier period, was wiped out and turned to a negative income of Rs.27.9 million in the three months under review, heavily weighing on the bottom line. 

For the full year (FY19), these incomes were mere Rs.75.1 million, compared to a billion rupees in 2018. 

The company lost Rs.1.24 a share or Rs.89.2 million for the quarter, compared to a profit of Rs.6.03 a share or Rs.433.5 million reported in the year earlier period. 

For FY19, the company lost Rs.23.38 a share or Rs.1.68 billion, compared to a profit of Rs.331.6 million in 2018. 

The revenues for the full year fell 22.2 percent to Rs.11.6 billion. 

According to segmental data, the revenue from shipbuilding operations fell to Rs.2.6 billion in FY19, from Rs.4.27 billion in 2018. 

The gross loss of the business was Rs.576.2 million, compared to a thin profit of Rs.62.3 million in 2018. 

The ship repairing business recorded revenues of Rs.5.77 billion, slightly down from Rs.5.93 billion. 

This business made a gross profit of Rs.710.2 million, compared to Rs.730.2 million in 2018. 

The heavy engineering operation of the company made revenues of Rs.1.26 billion in 2019, compared to Rs.1.53 billion in 2018 with gross profits at Rs.318.3 million and Rs.376.5 million, respectively.  

Onomichi Dockyard Company Limited has a 51 percent stake in the company while multiple state entities, including the Employees’ Provident Fund, combined have a 35 percent stake in Colombo Dockyard PLC.