Colombo Dockyard PLC, the largest and oldest shipbuilding company in Sri Lanka, has started receiving new inquiries for its shipbuilding, ship repairing, heavy engineering, and general engineering segments after a standstill of over two months, the company said.
Dockyard Chief Operating Officer (COO) Benny Fernando and Chief Financial Officer (CFO) P.D. Gihan Ravinatha, in a disclosure to the Colombo Stock Exchange (CSE) noted that the company has also started production work of four of its ongoing shipbuilding projects.
Dockyard, which is heavily dependent on foreign customers, had a significant negative impact on its operations due to travel embargoes between countries and the closure of international ports and airports since March.
This was further supported by the prolonged local lockdown since mid-March until May.
As a result, during this period, the ship repair segment operated at around 20-30% of its normal capacity while other segments were below 5%, as the company performed only essential ship repairing and maintenance activities. According to Fernando and Ravinatha, a dramatic low in operations is expected to report losses in the group’s revenue for both first and second quarters of this year.
Nevertheless, the expected normalisation of international port and airport activities and improvements in supply side constraints are expected to improve the third quarter revenue of the company.
“Though the overall trend of Covid-19 is still unclear to a greater extent, the management expects improvements in revenue and financial results from the third quarter of 2020. We are confident that Colombo Dockyard PLC will bounce back stronger,” Fernando and Ravinatha added.
Meanwhile during the lockdown period, the company also opted for a number of cost-reduction measures including the implementation of stringent cost-reduction initiatives without compromising the company’s engineering capabilities, postponement of repayment of working capital loans under the available debt moratorium schemes, pausing non-urgent capital expenditures, and ruling out new recruitments for this year.
According to the company, it is operating within its normal borrowing limits with adequate funding facilities, and the management does not forecast any significant cash flow issues in the short run.
Dockyard services over 200 ships annually and has a strategic advantage to conduct both dry dock and afloat operations. A state-of-the-art engineering entity, Colombo Dockyard PLC operates four graving dry docks with a maximum capacity of 125,000 deadweight (DWT) and extensive repair berth facilities.
– Madhusha Thavapalakumar