SINGAPORE (Nov 7): Yangzijiang Shipbuilding, the global shipbuilder based in China, reported 3Q18 earnings ended Sept of RMB778.6 million ($154 million), 10% lower compared to a year ago on higher expenses and lower other gains.

This brings 9M earnings to RMB2.4 billion, 5% lower than a year ago.

Group’s total revenue increased by 23% to RMB5.4 billion in 3Q18. In the shipbuilding segment, six vessels were delivered in 3Q18, compared to nine in 3Q17.

Supported by the construction and delivery of large and higher value vessels, core shipbuilding revenue was only marginally lower at RMB2.7 billion in 3Q18 compared to RMB2.8 billion in 3Q17.

Trading business generated RMB2.1 billion of revenue in 3Q18, compared to RMB1.3 billion in 3Q17, which is in line with the higher volume of trading activities.

Revenue generated by other shipbuilding related businesses such as shipping logistics & chartering and ship design services was RMB149 million in 3Q18, compared to RMB65 million in 3Q17.

The increase was supported by the higher charter rate and the charter income from four additional vessels following the acquisition of a wholly-owned subsidiary in 2018.

Gross profit margin for core shipbuilding business was at 20% for 3Q18, compared to 15% for 3Q17. The higher gross profit margin was contributed by the strengthened USD against RMB during the quarter, as well as a reversal of RMB152 million of provision that the group made previously in anticipation of potential losses when the RMB was stronger.

Expenses, which included administrative expenses and finance expenses due to impairment loss, quadrupled to RMB471.3 million while other gains fell 8% to RMB284.5 million.

In its outlook, Yangzijiang says the shipbuilding market is still in the recovery phase post the recession experienced in the last few years. In the first nine months in 2018, 796 new shipbuilding orders were placed globally, 13.6% lower in terms of number of vessels compared to the new orders in the first nine months in 2017. China, Korea and Japan received 32.2%, 44.3% and 11.5% of the new orders respectively.

Year to date, the group has secured new orders for 28 vessels with total contract value of US$1.2 billion ($1.6 billion) which will keep the group’s yard facilities at a healthy utilisation rate up to 2020 and provide a stable revenue stream for at least the next 2.5 years.

Year to date, shares in Yangzijiang are down 14.6% to close at $1.29 on Wednesday.