Pandemic hampers Colombo Dockyard 2Q performance

• Bets on eco-friendly bulk carriers for future growth

The financial performance at Colombo Dockyard PLC (DOCK) soured during the three months to June, as the firm’s shipbuilding operations significantly slowed amid the COVID-19 pandemic but the ship repairing business held up, albeit weaker compared to the year earlier period. 

However, the company plans to ride on the improving seaborne trade and the demand for eco-friendly carriers. DOCK recently undertook the work on the first of six eco bulk carriers for a Norwegian company. 

The company reported revenue of Rs.1.59 billion for the quarter under review, down 27.2 percent year-on-year (YoY). However, the company was able to narrow its losses to Rs.591.6 million for the period, from Rs.1.07 billion a year ago.

The curfews enforced from mid-March, travel embargoes and closure of international ports, had a significant bearing on all types of engineering activities of the group. The company’s activities were restricted only to essential ship repair and maintenance activities, till end-May. 

During the period from mid-March to end-May, the ship repair segment operated at 20 to 30 percent of capacity while the capacity utilisation of other segments plunged to just below 5 percent, before recovering to 50 percent from June, with the normalising of business activities, the company said.  

Sri Lanka’s largest shipbuilding and repairing firm in March struck a deal with Misje Eco Bulk AS (Misje), a Norwegian company, to build six firm plus four optional eco bulk carriers but the work began in September, the company said.  The segmental information showed that the shipbuilding revenue for the six months to June 30, had slumped to Rs.950.9 million, from Rs.2.48 billion in the year earlier period. The ship repairing business generated revenues of Rs.2.44 billion, close to Rs.2.59 billion recorded in the same period, last year. 

Heavy engineering, the other significant business segment, recorded revenues of Rs.538.4 million, compared to Rs.604.9 million in the year ago period. The company took short-term loans of Rs.1.87 billion during the six months to June 30, of which Rs.1.1 billion was invested in assets. Japan’s Onomichi Dockyard Company Limited has a 51 percent stake in the company. The Sri Lankan government owns 35.52 percent of the company, through various state-owned institutions.