Sri Lanka ship yard profits up

Sri Lankan ship builder Colombo Dockyard said net profit rose 32 percent to almost 1.5 billion rupees in 2008 from the year before, as it reaped the benefits of the shipping boom earlier in the year. Revenue went up 26 percent to almost 11.2 billion rupees in the year ending December 31, 2008, according to the yard's annual report.

Chairman Shinichi Tatebe said the yard's revenue target of 10 billion rupees set for 2011 had been achieved two years ahead of time.
"From January to June the business boomed, and we received new orders for six anchor handling tugs and two passenger vessels along with many other ship repair business.
"But since July, due to world economic turmoil there was an unexpected and drastic drop," he told shareholders in the annual report.
"Many shipyards in the region suffered setbacks but the orders we received stand confirmed without a single cancellation. Colombo Dockyard has sufficient work to move forward in the same momentum till end of year 2010."
The yard, which is majority owned by Japan's Onomichi Dockyard, has won orders from Indian customers and has shifted to building specialised vessels like anchor handling tugs in recent years.
The yard, which books profits on delivery of vessels, last year built and delivered two anchor handling tug supply vessel (AHT) for a subsidiary of Greatship (India) which is a wholly owned subsidiary of India's The Great Eastern Shipping Co.
The third tug for Greatship was delivered in February this year with a fourth also on order, along with four multipurpose platform support vessels also for Greatship, and two passenger vessels for the Indian government.
Although the yard currently has a full order book, analysts said it might be affected by the slump in shipping.
A slowdown in global trade and oversupply of tonnage has caused ship charter and freight rates to crash, prompting many lines to cancel orders for new vessels and postpone others, leaving yards with dwindling orders.
Repair work, which has been more profitable for Colombo Dockyard than new buildings, could also be hit as the economic slowdown erodes earnings of ship owners, forcing them to put off dry dockings.
However, tough new safety standards and anti-pollution rules might act as a counter to any temptation of ship owners under pressure to rein in spending by cutting back on maintenance.
Shipping industry analysts said the boom in shipping in the last few years was now over and that the industry had entered a cyclical downturn characterised by an over supply of vessels and low earnings for owners and charterers.