Colombo Dockyard, of which Japan's Onomichi Dockyard has a 51% stake, has released its financials for the twelve months to end-December 2010, indicating a group revenue of Rs. 14.50 billion, compared to Rs. 13.49 billion for the same period last year. However, it was an increase in group cost of sales to Rs. 11.22 billion, from Rs. 9.98 billion, that mainly contributed to group after-tax profit falling to Rs. 2.08 billion, from 2009's Rs. 2.15 billion.
At the same time, in terms of the three months to end-December 2010, group revenue was virtually stagnant at Rs. 3.73 billion, as opposed to Rs. 3.76 billion for the same period in 2009. However, a significant drop in group cost of sales, to Rs. 2.96 billion from Rs. 3.26 billion, and group other operating expenses, to Rs. 65.64 million from Rs. 305.36 million, resulted in group after-tax profit more than doubling to Rs. 741.52 million for 2010's fourth quarter compared to Rs. 334.24 million in the same quarter of 2009.
Meanwhile, segment-wise, the group had witnessed significant drops in full year revenue in both the ship repair, to Rs. 4.21 billion from Rs. 6.72 billion, and heavy engineering, to Rs. 922.50 million from RS. 507.41 million. While fourth quarter revenue fell to Rs. 974.13 million from Rs. 1.56 billion for ship repair and to Rs. 72.18 million from Rs. 198.69 million for heavy engineering. However, ship building grew unreservedly to almost twice 2009's full year revenue, equalling Rs. 9.56 billion, while fourth quarter revenue also improved in excess of Rs. 700 million. Additionally, the material sales business also grew slightly over the full year, to Rs. 215.59 million, even while experiencing a small fall, to Rs. 38.35 million, over the fourth quarter of 2010.
According to Chairman, Akihiko Nakauchi, who was quoted in the 2010 annual report; "While the global recession did affect our performance and revenue targets, it was 2010 that actually reflected the impact of the downturn. We closed 2009 considerably better than expected, but with the ship repair and ship building industries still recovering in 2010, which led to lesser marine traffic and ship building taking a back seat, Colombo Dockyard did see ship repair business decline, although overall figures are commendable."
He further added that "group profits therefore stood at Rs 2,085 million a decrease of 3% compared to that of 2009, although what we did see was that while ship repair showed a decrease in forecasted targets, shipbuilding on the other hand gained considerable momentum during the year, adding Rs 9,566 million into our top line."
Mr. Nakauchi also noted that the company had already "delivered five vessels in 2010 which exceeded our regular ship building capacity and displayed effectively that Colombo Dockyard is indeed ready for the impending challenges ahead. For the year ahead, we have seven orders currently in hand with more on the horizon. I see the future in shipbuilding as one in which we can firmly sustain our business on."
Additionally, he opined that, "[despite] the fact that Colombo Dockyard contributes 1.5% of Sri Lanka’s export revenue, we are faced with considerable challenges that have to be managed prudently. Given that our business is based on 37% average value addition with all raw material, equipment and machinery sourced from abroad, as with all exporters, the appreciation of the Sri Lankan Rupee could affect our bottom line significantly."
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