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Sri Lankan shipbuilder Colombo Dockyard PLC (CDP) posted a Rs. 1.4 billion after tax profit for 2008, a 32 percent increase from the previous year.
The company’s revenue had increased by 27 percent from 2007 to Rs. 10.9 billion last year, 90 percent of this earned in foreign exchange through export proceeds.
The total asset base of CDP grew by 7 percent during the year to Rs. 12.4 billion and its earnings per share increased by 25 percent to Rs. 20.80.
CDP Chairman Shinichi Tatebe told shareholders the company had surpassed the target of achieving Rs. 10 total revenue by 2010.
"The set for sales revenue was achieved two years ahead of time and well within the second segment of the three year strategic plan," he said in the company’s annual report.
The company’s revenue streams surpassed 2007 figures.
Ship repair revenues increased to Rs.6 billion from Rs. 4.6 billion, shipbuilding Rs. 4.2 billion from Rs. 3.5 billion, offshore engineering Rs. 562 million from Rs. 261 million and material sales Rs. 173 million from Rs. 134 million.
Only heavy engineering revenues fell by to Rs. 105 million during the year from Rs. 200 million in 2007.
Despite the downward trend in volumes in the heavy engineering sector the CDP annual report lists seven projects amounting to Rs. 485 million to be completed during 2009 and 2010.
"We expect to record the highest revenue achievement in the heavy engineering sector during 2009," the company said.
The company has been able to contain its financial costs.
In 2007 financial costs amounted to Rs. 124 million which has reduced to Rs. 72 million during 2008.
In a separate interview CDP Managing Director/CEO Mangala P. B. Yapa said CDP has a full order book which will keep the company busy until early 2011.
"We have a healthy workload until early 2011 despite the global economic recession but there are several issues we will have to contend with," CDP Managing Director/CEO Mangala P. B. Yapa said.
"There is a strong possibility that we may face credit issues due to the global economic crisis where our clients will not be able make payments on time while our suppliers too will face difficulties. We will have to be more flexible and prudent and manage our risks in order to minimize any loses," he told the Island Financial Review.
Meanwhile Yapa made the following observations in his massage to shareholders in the company’s annual report.
India factor…
Yapa says the global financial crisis has put the entire world in a quandary without visible and viable solutions and that CDP will remain vigilant and proceed with caution.
"Naturally we are concerned about China, a price puller who will dictate production rates and India who will be the opportunity provider," he said.
"China has seen the closure of many industries and innumerable shipyards that proliferated during the boom. On the contrary, the Indian factor plays a pivotal role in our business portfolio, as it contains a large Indian customer base, making up 58 percent of our current revenue.
Adversity has its threats and benefits, as India appears to be a more stable economy slower in growth but steadier," Yapa said.
He said that India is poised to take the helm and chart the course for the global shipbuilding industry, along with East Asia.
"Colombo Dockyard is firmly seated to seize upon the possibilities culminating from the anticipated growth in their economy," Yapa said adding that Malaysia too provided stiff competition and that South Asia’s development prospects would provide ample opportunities to the company while prospects of the region would be a threat.
