Revenues and profits soar at China Rongsheng Heavy Industries

Hong Kong listed shipbuilding giant China Rongsheng Heavy Industries Group Holdings Limited reports soaring revenues and profits for the six months ended June 30, 2011 – a period that saw the company mark milestones such as the launch of its first 400,000 dwt VLOC for Vale, Brazil.

Revenue for the period increased significantly to RMB 8,703.5 million – a year-on-year growth rate of 81.1 percent. Profit attributable to equity holders  increased significantly to RMB 1,216.7 million -a year-on-year growth rate of 639.0 percent

Gross profit margin increased to 23.2 percent; Net profit margin after minority interest maintained at 14.0 percent

Shipbuilding revenue grew to RMB 8,436.2 million, representing a year-on-year growth rate of 85.8 percent; Engineering machinery revenue grew to RMB 236.0 million, representing a year-on-year growth rate of 200.6 percent; China market contributed revenue grew to RMB 2,582.0 million, representing 29.7 percent of total revenue (six months ended 30 June 2010: 8.5 percent)

New shipbuilding orders measured by contract value increased year-on-year by 30.3 percent to approximately USD1.3 billion. The company says that Clarkson Research date indicate that its new shipbuilding orders measured by deadweight tonnage (“dwt”) represent a global market share of 9 percent and China market share of 21 percent.

Shipbuilding deliveries in the period totaled eight vessels, of an aggregate volume of 1,288,000 dwt. Revenue from the shipbuilding segment was RMB 8,436.2 million, representing 96.9 percent of total revenue.

“We adjusted our tactics to adapt to the market trends. Leveraging on our success in very large ore carriers (VLOCs”), we aimed at the market segment of large bulk carriers of 200,000 dwt or above, and successfully secured ten new orders of this type,” says the company.

China Rongsheng says it has been moving up the value chain by building an order book with more high-value vessels. During the period, it secured shipbuilding orders for four 6,600 TEU containerships and says it will continue developing advanced products to meet the market demand for fuel-efficient and low-emission vessel types.

The shipbuilder’s first 400,000 dwt VLOC, one of the 16 orders of this type, was successfully launched at a naming ceremony, witnessed by the chief executive officer of Vale do Rio Doce.

Order Book and New Orders

“Despite the downturn of the shipbuilding industry during the period,” says the company, “our strong ability to obtain new orders makes us stand out among Chinese shipbuilders. We were granted new orders for 28 vessels in the period, representing a total volume of 3.4 million dwt with a total contract value of approximately USD 1.3 billion, accounting for 21 percent dwt of new orders in China and 9 percent in the world. The group’s total orders on hand as of June 30, 2011 were 109 vessels, representing a total volume of 17.4 million dwt with a total contract value of USD 6,751.1 million, which included 49 Panamax bulk carriers, 17 Capesize bulk carriers, 16 VLOC, 17 Suezmax crude oil tankers, two very large crude oil carriers (VLCCs), four 6,500 TEU containerships and  four 6,600 TEU containerships. All the vessels in our order book are scheduled to be delivered during the period from 2011 to 2016.”

Offshore Engineering
Revenue from offshore engineering segment for the period, from the construction of a 3,000-meter deepwater pipe-laying crane vessel (DPV), was RMB 31.3 million.

In June 2011, the DPV, constructed for strategic partner CNOOC, was successfully undocked and entered the final preparation stage for delivery. This state-of-the-art vessel was the first joint offshore engineering project between CNOOC and the Group.

China Rongsheng says it is focusing on the domestic offshore engineering market where China’s growing demand for offshore oil and gas stimulates upgrading of offshore equipment. China Rongsheng has been continuously enhancing its research and development on complex vessel types such as drilling rigs and LNG carriers. An engineering team went to GTT in Franc for training in early 2011, in preparation for LNG carrier containment systems and mock-up installation. We have been solidifying our technical prowess for breaking the high technological barrier to the global offshore market.

Marine Engine Building

China Rongsheng’s marine engine building segment has been developing rapidly.

“In the first half of 2011,” it says “we made breakthroughs on external sales of marine engines. We secured new orders for 26 marine diesel engines in the Period, representing a total capacity of 464,432 horsepower with a total contract value of USD134.9 million, The Group’s total orders on hand as of 30 June 2011 were 66 engines, representing a total capacity of 1,348,573 horsepower with a total contract value of USD369.7 million, of which 24 were external orders. The Group’s total orders on hand as of 30 June 2010 were 23 engines, representing a total capacity of 648,310 horsepower with a total contract value of USD148.5 million, of which 3 were external orders. In the Period, we delivered 13 diesel engines with a total capacity of 227,466 horsepower. For the Comparative Period, we delivered 2 diesel engines with a total capacity of 65,970 horsepower.

“The Group completed the production of one new model during the Period: the 5S60ME-C electronically controlled diesel engine. This low-emission and fuel-efficient model meets stringent emission regulations imposed by maritime organizations and fulfills the growing demand for fuel efficient vessels.”

August 24, 2011