COSCO Corporation (Singapore) Limited said it forecasts a significant net loss for the fourth quarter and full year results compared to the year-ago periods.
The expected loss was mainly due to persistently low crude oil prices curtailing business in the global offshore marine sector; reduced demand for new ships weighing on the company’s shipbuilding unit; and the continued dismal backdrop to the dry bulk industry severely affecting dry bulk fleet operations.
The Singapore-listed Cosco noted that for the fourth quarter ending December 31, 2015, its shipyards had to write down certain inventory and make provisions for the impairment of trade receivables for some contracts which had been deferred or could possibly be cancelled.
The company in November agreed with oil drilling company Sevan Drilling to further defer the delivery of the Sevan Developer drilling rig for another six months to April 15, 2016.
The subsidiary of shipping conglomerate China Cosco Group will report its full year 2015 results on February 19, 2016.
Reflecting the dire market conditions, Cosco Singapore’s subsidiary Cosco Shipyard in November had to get Yuan20bn ($3.1bn) in financing from China Development Bank’s Dalian arm which will be allocated over the next five years.
Cosco Singapore had reported a net loss attributable to shareholders of S$82m ($58m) in the third quarter from a gain of S$7m a year earlier, mainly due to decreases in shipyard and shipping revenues, while cash reserves decreased from S$1.6bn at end-December 2014 to S$1.5bn as of September 30, 2015.