COSCO Corporation prospects newbuilding orders will decrease with yard over-capacity problem being aggravated.
The Singapore-listed conglomerate predicts that due to poor newbuilding investment from owners, new orders will keep dropping in the rest of 2013.
Also, the company expect operating margins on newbuilding projects would continue to be under great pressure from construction of low-margin newbuildings contracted in 2010-2012.
The depressed outlook is magnified by depreciation of the US dollar against the Chinese yuan and a potential rise in general Chinese wages, prices of raw materials as well as higher financing costs, and entry of new offshore players, all of which may exert greater downward pressure on operating margins.
Meanwhile, COSCO announced its quarterly report and revealed that it posted SGD 9.74m of net profit and SGD 733m of revenue in the first quarter, which saw 65% and 25% decrease each against the same period of last year.