A slump in shipbuilding activity amid dire market conditions swamped Cosco Corporation (Singapore) with red ink in the fourth quarter.
The firm recorded a net loss of $483.8 million for the three months to Dec 31, compared with a net loss of $13.2 million in the same period a year earlier.
Cosco blamed the huge losses on higher write-downs of inventories of $289 million and an increased allowance for impairments relating to contracts for Brazilian customers of about $305 million.
Turnover fell 21 per cent to $725.5 million from $915.8 million in the previous year, owing to decrease in shipyard and shipping revenue.
Cosco said the shipyard business remained its biggest revenue contributor, accounting for 99 per cent of group turnover in the fourth quarter.
Sales from shipyard operations came in at $716.3 million, down 20.6 per cent from the previous year.
The decline was mainly due to lower contribution from marine engineering and shipbuilding, which was partially offset by an increase in revenue from ship repair.
AT A GLANCE
NET LOSS: $483.8 million (Not meaningful)
REVENUE: $725.5 million (-21%)
DIVIDEND: None declared
The dry bulk shipping and other businesses recorded turnover of $9.2 million - down 31.6 per cent from a year earlier.
Loss per share came in at 21.61 cents in the fourth quarter, widening from the loss per share of 0.59 cent a year ago.
Net asset value per share was 36.71 cents as at Dec 31, a sharp drop from 61.08 cents on Dec 31, 2014.
Cosco recorded a net loss of $570 million for the full year, compared with a net profit of $20.9 million in 2014, while revenue was down 17 per cent at $3.5 billion.
Vice-chairman and president Wu Zi Heng said in a statement yesterday that the global offshore market continues to slow significantly, with no signs of improvement.
"Amid persistent weakness in the state of the global economy and depressed crude oil prices, the group continues to face adverse...market conditions," he added.
The fall in oil prices has led many oil majors to cut expenditure, leading to fewer orders for rigs and support vessels, Cosco said.
The firm also noted that global overcapacity in shipping drove new orders to low levels last year.
Its order book stood at US$8 billion (S$11 billion) as at Dec 31, with progressive deliveries up to early 2018, the firm said.
Cosco added that it expects any possible recovery in the dry bulk shipping segment to be slow and "fraught with uncertainty", given the weak macroeconomic conditions.
Captain Wu noted that the challenging operating conditions are "likely to persist and even worsen this year".
Against this backdrop, he said the group will "capitalise on the downturn to improve our capabilities for long-term sustainable growth in our offshore marine engineering and new shipbuilding operations".
Cosco shares closed up a cent at 32 cents before the results were announced yesterday.