Taiwan's biggest shipbuilder expects fall in profit this year

CSBC Corp., Taiwan’s biggest shipbuilder, said profit may fall this year as it works through low-margin orders placed by government-owned companies during the global recession. “There’s no money to be made from these contracts,” President Paul Tang said in an interview in his Taipei office Tuesday. Orders for tankers from refiner CPC Corp. and for coal ships from Taiwan Power Co. did help the shipyard weather the economic slowdown and a global slump in order, he said.
An economic rebound has now revived demand with vessel prices rising at least 10 percent from the lowest point during the global recession, Tang said. Evergreen Group and Neptune Orient Lines Ltd., Asia’s two largest container lines, both ordered new ships last month as U.S. and European retailers boost purchases of Asian-made toys, furniture and auto-parts.
“The container-shipping market is improving after having several bad years as the global economy recovers,” said Michael On, president of Beyond Asset Management Co., who rates CSBC “neutral.” “Orders for new vessels may increase.”
Production at CSBC, as measured by steel work, bottomed in the first half, Tang said. The shipbuilder, which has a yard in Kaohsiung in southern Taiwan and another in Keelung in the north, is fully booked through the first half of 2013, he said.
“It looks like the market had reached its lowest point,” Tang, 64, said. “It’ll be clear in late 2011 or 2012 if the recovery stands.”
CSBC made an unaudited net income of NT$878 million ($28 million) in the first seven months of the year, according to an Aug. 6 stock exchange filing. There was no year-earlier comparison. Sales fell 26 percent in the period.