Shipbuilding firm CSIC on course despite stormy market

BEIJING - Despite tough conditions in the global shipping market, China Shipbuilding Industry Corp (CSIC), one of the country's major shipbuilding conglomerates, maintained steady business last year, said a company official.

To cope with market conditions, the company will dedicate more resources to producing offshore oil and gas exploration equipment, said Wang Liang, director of the production and management department.

The company estimates that its revenue last year rose to 160 billion yuan ($24 billion) from 142.5 billion yuan a year earlier. Profit is estimated to have risen more than 10 percent year-on-year to 10 billion yuan.

Analysts said the figures represent a sound performance amid a dull market.

Last year was a rough one for the global shipping industry. Affected by the European debt crisis, the world economy didn't recover sufficiently to shore up trade flows.

Also, surging fuel prices and a glut of vessels depressed the profits of shipping liners. Industry data show that more than two-thirds of shipping companies across the world reported losses.

Shipbuilders, at the end of the industry chain, were the last to be affected. Small shipyards were hit hard as new orders were mainly for the more sophisticated vessels that only big shipbuilders have the technology to produce, analysts said.

Consequently, the number of new orders declined. From January to November last year, 33.69 million deadweight tons (DWT) of new vessels were ordered from Chinese shipyards, down 47.3 percent.

In November alone, 3.94 million DWT were ordered, down 60 percent, according to the China Association of the National Shipbuilding Industry (CANSI).

Industry losses were widespread. For the January-October period, Chinese shipbuilders reported total losses of 3.03 billion yuan, up 40.6 percent, according to CANSI.

More than 15 percent of shipbuilding companies in China reported losses in 2011, "a large increase from last year", said CANSI.

This year "will be the most difficult for the Chinese shipping industry", Zhang Shengkun, president of the Shanghai Society of Naval Architects and Marine Engineers, said at a recent industry forum in Shanghai.

But for CSIC, the weak market is an opportunity to adjust its product structure, Wang said.

In 2012, the company will focus on developing more sophisticated vessels, while trying to enter new markets, such as Brazil and the Middle East, he said.

Wang said CSIC would devote more resources to non-marine products, such as equipment for offshore oil exploration and wind power facilities, to reduce business risks.

The company has nine orders for offshore oil-drilling platforms. "We intend to make the business of non-marine manufacturing account for more than 40 percent of our total revenue in 2012," Wang said.