By: Staff Writer
July 30, Colombo (LNW): Colombo Dockyard PLC’s latest quarterly results reveal a business undergoing a major transition, with ship repairs carrying the company back into profit while shipbuilding and engineering operations continue to weigh on performance.
The group recorded a net profit of Rs.80.2 million during the three months ended June, marking a sharp reversal from the Rs.813.4 million loss reported during the same period last year. The improvement highlights the impact of operational restructuring, stronger repair activity and reduced financial pressure.
Revenue, however, remained under strain. Group turnover declined 6.8 percent to Rs.5.84 billion, reflecting weaker contributions from some business segments. Yet the decline in revenue was offset by a much larger reduction in production costs. Cost of sales fell 21.8 percent to Rs.4.63 billion, allowing gross profit to rise more than threefold to Rs.1.21 billion.
The company’s ship repair business was the centre of the recovery. Segment revenue surged 48.4 percent to Rs.3.95 billion, while gross profit increased to Rs.1.46 billion. The figures demonstrate the growing importance of repair work in supporting earnings at a time when new vessel construction remains challenging.
Shipbuilding continued to face difficulties. Revenue from the segment plunged 61.6 percent to Rs.1.05 billion, and the operation remained loss-making. However, the gross loss narrowed to Rs.378.8 million compared with Rs.899.6 million in the previous year, suggesting some improvement in cost control.
The heavy engineering division also lost momentum. Revenue declined to Rs.703.6 million, while segment profit fell dramatically from Rs.480.7 million to Rs.30.4 million.
A major factor behind the return to profitability was the company’s lower financing burden. Net finance expenses dropped 63.8 percent to Rs.188.2 million, providing significant relief. The company nevertheless faced rising overheads, with administrative expenses increasing 18.2 percent to Rs.1.03 billion.
The improvement in accounting profits has not yet translated into stronger operating cash generation. Colombo Dockyard recorded a cash outflow of Rs.678.1 million from operations, driven largely by a sharp increase in receivables. Trade and other receivables expanded by Rs.3.43 billion during the quarter, highlighting the importance of improving collections.
Financial strength also remains under pressure. The group ended June with Rs.8.48 billion in cash, but interest-bearing borrowings stood at Rs.14.79 billion and bank overdrafts reached Rs.1.70 billion.
Equity improved significantly to Rs.15.59 billion from Rs.4.07 billion a year earlier, although accumulated retained losses remained at Rs.9.23 billion.
The company’s decision to move its financial year-end from December to March aligns reporting with parent Mazagon Dock Shipbuilders Limited. While the latest figures indicate a promising recovery, sustaining profitability will depend on maintaining repair sector momentum, improving cash conversion and addressing weaknesses in shipbuilding.
