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SBIC loses $101.94 million in 2014

Released at: 11:57, 01/01/2015

SBIC loses $101.94 million in 2014

Vietnam Shipbuilding Industry Corporation (SBIC) puts loss down to high costs, especially interest payments.

by Son Ho

Vietnam Shipbuilding Industry Corporation (SBIC), formerly known as Vinashin, has just released a report on its production and business activities in 2014.

It had an estimated production value of $266.53 million, equal to last year’s result, primarily from ship building and repair. It handed over 76 vessels, earning $200 million, of which 33 were for overseas buyers, valued at nearly $34 million. Most of the ships it built for domestic use are part of a program to modernize fishery inspection vessels, together with steel-armored fishing vessels. The number of ships handed over exceeded the target by five. Unit members of SBIC handed over 47 ships in 2013 with revenue of $142 million.

Total revenue this year exceeded $357.25 million, 30 per cent higher than the plan set at the beginning of the year. However, by the end of fiscal year 2014 SBIC posted losses of more than $101.94 million. High costs, especially interest payments of $130.93 million, were behind the loss.

SBIC leaders acknowledged that 2014 was a challenging year for the shipbuilding industry. The transport sector has shown signs of recovery but export orders are yet to come in significant numbers to the corporation. “Previously, ship owners often paid a large proportion of the contract value in advance, but now we must outlay more money during building,” said Mr. Nguyen Ngoc Su, Chairman of SBIC. “Payment is now received only when the vessel is completed and handed over. It’s difficult for the corporation to access bank loans.”

The fact that credit institutions have tightened lending has created unfavorable factors for all shipbuilding companies, and some contracts signed previously have been stopped or delayed by ship owners.

SBIC has completed restructuring its foreign debts ($135 million) and first phase domestic debts ($776.82 million, including interest) and is currently continuing restructuring the second phase of its domestic debts, international bond debts from the Ministry of Finance, and debts to contractors.

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