Colombo Dockyard losses widen in March

Sri Lanka’s largest ship builder, the Colombo Dockyard PLC (DOCK), saw its losses widening during the March quarter (1Q19) despite a significant increase in the company’s top line performance, the interim financial accounts released to the Colombo bourse showed.

DOCK lost Rs.2.60 per share during the quarter under review with the net loss widening to Rs.187 million from Rs.117.2 million a year ago and against a net profit of Rs.433.5 million three months ago.

The revenue for the quarter under review rose 41 percent year-on-year (YOY) to Rs. 3.7 billion with all business segments of the group contributing positively. The cost of sales grew at a slower pace of 40 percent YOY to Rs.3.2 billion, resulting in a gross profit of Rs.510 million, up 53 percent YOY.

However, DOCK’S gross profit was wiped out by a Rs.578.6 million administrative expense, up 6.8 percent YOY. The group also incurred other expenses to the tune of Rs.116.6 million against other income of Rs.67.3 million a year ago.

The segmental information provided in the interim financial accounts showed the shipbuilding business almost doubling its revenue to Rs.1.74 billion.

The segment’s gross profit also improved to Rs.82.2 million from Rs.8.7 million a year ago. The ship repairing segment showed an improvement in revenue to Rs.1.44 billion with gross profit increasing slightly to Rs.256 million.

The heavy engineering business also almost doubled its revenue to Rs.402 million with a gross profit of Rs.114.5 million, up from Rs.61.2 million a year ago.

The fall in the global oil price hit DOCK hard as building of offshore support vessels for oil platforms was the company’s specialty. DOCK had to cancel or renegotiate most of the orders placed for such vessels by customers with the fall in oil prices.

Japan’s Onomichi Dockyard owns 51 percent of DOCK and the Sri Lankan government through various State-owned institutions holds 35 percent stake in the company.