Repair damage for Swire

Tougher competition in the Far Eastern shiprepair market held back the performance of Hong Kong’s Swire Pacific group through the first half.

The attributable profit of Hongkong United Dockyards owned in partnership with Hutchison Whampoa dived to HKD 14m ($1.8m) from HKD 37m through the same period of last year.

Swire Pacific said the performance was adversely affected by continued competition from regional marine repair facilities.

There was no further explanation of what happened but shiprepair costs have fallen sharply as previously busy newbuilding yards particularly in the Far East have tried to compensate for a reduction in orders by moving into the the repair sector.

Profitability of Hong Kong Salvage & Towage was also down through the first half falling to HKD 69m ($8.9m) from HKD 102m in the first six months of 2013.

The result was affected by the loss of a large harbour towage contract at the end of 2013 while tug moves were 7% down.

Swire Pacific warns that Hong Kong tug demand is likely to remain under pressure as container lines reduce the number of scheduled calls.

Hong Kong Salvage & Towage is to pursue seagoing tows and project work and is also planning to sell a 4,000 BHP tug in the coming months to raise the utilisation rate of its 19 vessel fleet.

In contrast the earnings of Swire Pacific Offshore operating a fleet of 86 support vessels held up bringing in HKD 644m through the first half, a couple of million dollars higher than the same period of 2013.

Offshore charter hire revenue was 25% higher at HKD 3bn reflecting the contribution of new vessels and the earnings of specialised construction craft.

Average charter rates were 16% higher at $29,100 a day but this figure conceals a huge difference in rates for different types of vessels.

The core anchor handler and platform supply vessels earned an average of $21,900 a day but the construction craft were on an average of $94,600 a day.

Swire Pacific is optimistic about the offshore market outlook for the second half despite potential oversupply of vessels and downward pressure on costs from oil and gas companies.

Through the half year investment in new vessels amounts to HKD 1.9bn with options exercised on four platform supply vessels.

Swire Pacific says it is in discussion with a Brazilian yard about delay in the construction of four large supply vessels.

Overall profit of Swire Pacific for the first half fell to HKD 6.5bn ($839m) some HKD 124m lower than the same period of last year.

Marine operations are dwarfed by the group’s Cathay Pacific Airline, property business, beverage and trading activities.