Cosco Corp crippled by 84% net profit drop

Despite 6% rise in revenue.

According to OCBC Investment Research, COSCO Corporation reported a 6% YoY rise in revenue to S$989.4m but saw an 84% drop in net profit to S$4.2m in 3Q13, such that 9MFY13 net profit accounted for 53% of our full year estimate. 

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The results also disappointed the street, as 9MFY13 net profit only made up 42% of the full year consensus figure of S$62.6m. Gross profit margin was only 7.4% in 3Q13 vs. 12.3% in 3Q12, mainly because of a S$33.9m provision for expected losses on construction contracts.

A S$15.8m provision was also taken for inventory write-down. This resulted in a net profit margin of 0.4% in the quarter vs. 2.8% in 3Q12.