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August 5, 2008

Singapore-listed Cosco sees Q2 profit up 60 pct
Singapore-listed shipbuilding and repair firm Cosco Corp posted a 60 percent rise in quarterly profit on Monday, boosted by a booming ship repair and building business, reported Reuters.

Cosco, 53-percent owned by China’s government and controlled by the mainland’s biggest shipping firm China Ocean Shipping (Group) Co, said it remained confident of its prospects for the full year.

The company said it has not been hit by any order cancellations for its new ships, after stocks of Singapore-listed shipbuilders including Cosco fell on Monday on news of order cancellations from Korean shipbuilders.

“People are concerned about what is happening in Korean shipyards. I’m glad to tell you we did not receive cancellations of new buildings at present,” Cosco President Ji Hai Sheng told a media briefing.

“In future, the situation could change but Cosco Group is doing quite well,” he said, adding that the firm would not accept orders from smaller and financially weaker companies.

Despite the slowing global economy, Ji said Cosco would not slow down the expansion of its facilities, which would boost capacity 88 percent by early 2010, on a bright outlook for rig building.

The Singapore-listed firm earned S$128.7 million ($94 million) in the April-June quarter, compared with S$80.4 million in the year-ago period.

Analysts are worried that shipbuilders such as Cosco will be hit by higher steel costs, which will have an impact on operating margins for the full-year.

The firm’s sales of scrap materials during the period more than doubled to S$38.4 million from S$17 million a year ago, thanks to the soaring steel prices and as the firm takes on more ship conversion contracts.

Cosco is expected to post full-year mean net profit of S$479.8 million, up 43 percent for a year ago, according to 12 analysts polled by Reuters Estimates before Monday’s results.

Second-quarter revenues doubled to S$1.05 billion from S$512.3 million a year ago.
Cosco said its order book stood at $7.4 billion in the second quarter, reflecting slower growth from the previous quarter as it has tightened its rules on the recognition of new orders. It now books an order only after it receives the down payment.

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