Find out why COSCO's 1Q13 performance was disturbingly disappointing

Turnover form shipyard operations dropped 26%.

According to OCBC, COSCO Corp’s 1Q13 revenue and net profit attributable to shareholders came in at S$733m (-25% YoY) and S$9.7m (-65% YoY) respectively.

Turnover from shipyard operations, consisting of ship repair and shipbuilding, decreased by 26% YoY to S$719m in 1Q13 (1Q12: S$966m), while turnover for dry bulk shipping and other businesses increased by 8% YoY to S$13.8m (1Q12: S$12.8m).

Here's more from OCBC:

All in all, 1Q13 performance was disappointing with PATMI forming only about 9-10% of ours and consensus’ FY13F estimates.

Gross profit margin remained stable at 10.7% in 1Q13, comparable with the 10.1% in the year-ago quarter.

However, net margin declined to 1.3% (1Q12: 2.8%), mainly due to (1) lower sale of scrap materials, (2) an exchange loss, and (3) higher finance expenses.

As the group continues construction on the low-margin contracts in its order-book, management expects its operating margins to continue “under great pressure notwithstanding improving gains in efficiency and productivity”.

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