Guangzhou Shipyard International Co. (317), a unit of China’s biggest shipbuilder, said first-quarter profit fell 50 percent because of higher prices of steel plates.
Net income for the three months ended March 31 declined to 129.3 million yuan ($18.9 million), or 0.26 yuan a share, from 258 million yuan, or 0.52 yuan, the company said in a statement to the Shanghai stock exchange.
“They may still be using some of the high-priced inventory acquired in the middle of 2008 when steel prices were high,” Jack Xu, a Shanghai-based analyst at Sinopac Securities Asia Ltd., said before the announcement. “The company had a very good first quarter in 2008, which makes the comparison tough.”
Guangzhou Shipyard also incurred higher financing costs during the period as it received fewer orders, according to an April 9 exchange filing. Orders placed with Chinese shipbuilders plunged 94 percent in the first three months, according to government estimates, as a global recession erased demand for ships to carry raw materials and consumer goods.
Guangzhou Shipyard fell 0.7 percent in Hong Kong trading to close at HK$11.22 today before the earnings announcement. The shares have surged 58 percent this year, compared with a 5.8 percent gain in the key Hang Seng Index.
The Guangzhou, southern China-based company completed and delivered four vessels, the statement said. It secured orders for building 60 vessels, with a total tonnage of 2.66 million deadweight tons, it said.
Chinese shipyards may have cash shortages of about $30 billion in the next three to four years, the China Daily reported on April 8, citing Li Li, a deputy general manager of Export-Import Bank of China’s ship finance department.
The biggest decline in global shipping rates in two decades led to a worldwide 95 percent decline in new vessel orders in March, according to Clarkson Plc, the world’s largest shipbroker.
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