“Explore Colombo Dockyard’s strategic growth amidst Sri Lanka’s financial challenges. Discover insights into shipbuilding, ship repairs, and market performance for 2023.”
Colombo Dockyard’s Optimism Despite Financial Market Uncertainty
Colombo Dockyard remains cautiously optimistic about the stabilization of Sri Lanka’s financial market despite ongoing challenges. The company acknowledges that external pressures from global economic conditions and the lingering effects of Sri Lanka’s financial crisis have negatively impacted its financial performance. However, the global market demand for shipbuilding and ship repairs appears promising in the near future. Nonetheless, Sri Lanka‘s financial market problems will continue to challenge Colombo Dockyard PLC’s growth targets.
Promising Market Prospects
As Sri Lanka’s largest engineering facility, Colombo Dockyard excels in ship repairs, shipbuilding, heavy engineering, and offshore engineering through its collaboration with Japan. The company plans to leverage its market recognition gained in 2023 to pursue future prospects. Colombo Dockyard PLC’s Managing Director/CEO, Thimira S. Godakumbura, expressed confidence in achieving long-term goals through a mix of market penetration and product development approaches.
Strategic Growth and Market Responsiveness
Godakumbura emphasized that Colombo Dockyard is on a steady growth path in shipbuilding, ship repair, heavy engineering, and yard development. The company aims to remain market-responsive and prudent to achieve long-term growth and create value for its stakeholders. Despite the challenges, the company is committed to maintaining its trajectory towards success.
Financial Performance and Challenges
In 2023, Colombo Dockyard experienced a loss of Rs. 11,127 million due to external pressures and the country’s financial crisis. However, the Group recorded a total revenue of Rs. 36,167 million, a 33% increase compared to the previous year’s Rs. 27,291 million. Shipbuilding revenue surged by 76%, while ship repairs revenue saw a modest increase of 9%, amounting to Rs. 15.8 billion in 2023.
Export Revenue and Earnings
The Group’s export revenue, primarily from shipbuilding and ship repair activities, totaled Rs. 31,724.5 million in 2023, a notable 36% increase from the previous year’s Rs. 23,308.07 million. Despite achieving a 32% increase in revenue compared to 2022, the shipbuilding sector’s poor performance led to a significant decline in earnings before tax, depreciation, and amortization, which amounted to Rs. 12,849 million, down from the previous year’s Rs. 1,347 million.
Contributing Factors to Financial Downturn
Several factors contributed to Colombo Dockyard’s financial downturn, including Sri Lanka’s economic crisis, the country’s default on debts, global supply chain disruptions, high interest rates on local and foreign loans, and rapid exchange rate fluctuations. Other income for the Group was Rs. 478.4 million in 2023, with scrap sale income being the major contributor, representing 69% of other income.
Revenue Contribution from Subsidiaries
In 2023, Dockyard General Engineering (Pvt) Ltd accounted for 9% of the total group revenue, Dockyard Total Solutions (Pvt) Ltd contributed 1%, and Ceylon Shipping Agency contributed 7%. The heavy engineering sector added Rs. 2,963.6 million to the group revenue.
Stock Market Performance
As of December 31, 2023, the share price of Colombo Dockyard stood at Rs. 50, reflecting a 15% decline compared to the previous year’s closing price of Rs. 59.
Conclusion
Colombo Dockyard’s cautious optimism and strategic market approaches underscore its commitment to overcoming financial challenges and achieving long-term growth. Despite the negative impact of Sri Lanka’s financial crisis and global economic pressures, the company remains focused on its growth trajectory in the shipbuilding and ship repair sectors.