Tsuneishi Shipbuilding Company's earnings report for fiscal 2006 (December) reports sales of 95.1 billion yen , with current profits of 9 billion yen. 70 billion yen in investments planned over the next 5 years

April 24, 2007

TSUNEISHI SHIPBUILDING

Tsuneishi Holdings Corporation (head office: 1083 Tsuneishi Numakuma-cho Fukuyama-city Hiroshima, CEO: Katsushige Kambara, hereinafter called “Tsuneishi HD”) announced that the Tsuneishi Shipbuilding Company's earnings report for fiscal 2006 (April to December) reported sales of 95.1 billion yen, and current profits of 9 billion yen. Although the current profit represents 9 months sales, it was the second highest reported profit ever (the prior year’s sales, the highest to date, reached 9.2 billion yen). The sales breakdown is 90 billion yen for shipbuilding, 2.9 billion yen for ship repair, and 2.2 billion yen for other sales.

The total number of ships built by Tsuneishi Shipbuilding Company in fiscal 2006 (April to December) was 32 ships (prior year: 44 ships) with a breakdown of 15 ships at the Tsuneishi factory (including 5 ships for which large sections were constructed in the Shuzan factory in China before being assembled in Japan), 9 ships at the Tadotsu factory, 8 ships at Tsuneishi Heavy Industry Cebu in the Philippines (THI). The total volume of construction was 1.24 million tons (prior year: 1.63 million tons).

The total number of shipbuilding orders in fiscal 2006 was 78, including 17 newly designed “initial cost planning ship (*1)” Aframax tankers, 30 Kamsarmax tanker 82BCs, 30 Handymax 58BCs, and one car carrier. It was the highest number of orders to date, even though including only those orders made in the latter two thirds of the year. These excellent results derive from a robust U.S. economy, economic growth in China, and the ensuing increases both in cargo shipped and demand for additional ships. As of December, 2006, the number of ships ordered but not yet finished is 172, with a total volume of construction reaching 7.26 million tons.

Additionally, in consideration of both ship safety and environmental concerns, regulations regarding ship structure and ballast tank coating were changed, and the new coating standard (PSPC) was to be applied from December 2006 in addition to the IACS Common Structure Regulations (*2) issued in March 2006. Many clients made orders before these regulations went into effect, increasing the order number.


70 billion yen will be invested in facilities over the next 5 years.

Tsuneishi Shipbuilding Company plans to invest 70 billion yen within the next 5 years. The company plans to establish 3 docks and 5 building berths at 4 factories both in Japan and abroad by 2010. These improvements will help us to realize sales of 300 billion yen, including 100 billion yen in 2 domestic factories and 100 billion yen each for 2 overseas factories. Facility construction will mainly be done at overseas factories, including building a new dock in THI, an investment of 22 billion yen.

The company aims to have the top share in the world’s mid-size ship (including 50,000 to 80,000 tons class bulk carries and 100,000 tons class mid-size tankers) market and to achieve the No.1 profit rate with an operation scale of 300 billion yen. The company is making great efforts, especially to maintain competitive costs and expand overseas operations, in order to be internationally competitive with Korea and China.

 

*1: Initial Cost Planning Ship
This model of shipbuilding involves approaching the development and design of the ship’s frame based on marketing strategies, so that total costs can be held to a minimum. Up to now, 58,000 ton and 82,000 ton bulk carriers, and 100,000 ton class Aframax tankers have been completed.

*2: IACS Common Structure Regulation (CSR)
The International Association of Classification Societies (IACS) created this regulation to strengthen the bodies of bulk carriers and tankers. It is the standard structural rule applied from April 1st, 2006.

-- Contact for this article --
Business Planning Department of Tsuneishi Shipbuilding Company
Tsuneishi Holdings Corporation

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