ECONOMYNEXT – Sri Lanka’s Colombo Dockyard has declared a loss of a billion rupees in the December 2015 quarter as it was forced to cancel an order and lower prices for new ships ordered by clients serving the oil industry.
Delayed accounts filed with the Colombo stock exchange showed the yard suffered a loss of 591 million rupees for the year ended 31 December 2015 against a profit of 291 million the previous year.
The yard, majority owned by Onomichi Dockyard of Japan, had made 174 million rupees in net profit in the December 2014 quarter.
Colombo Dockyard said in a statement that “adapting to prudent accounting practices and governance, the company has made a provision of 1,171 million rupees immediately in the fourth quarter, recording a cumulative loss of 709 million rupees or financial year 2015.”
The company was transferred to the Colombo Stock Exchange’s default board after it announced it would have to delay publishing accounts for the December 2015 quarter as it was renegotiating orders for new ships with customers hit by the sharp drop in oil prices.
The firm has now been transferred out of the default board.
The statement said that after talks with clients, they agreed to cancel one contract for a new ship “which was at the initial stage of planning and to continue with the balance three contracts at a discounted price.”
These three ships will be constructed and delivered to the customers during 2016 and 2017.
The new ships were to be delivered during 2016 and 2017 for use in the offshore oil drilling industry which is suffering to the lower oil prices.
(COLOMBO, April 07, 2016)