China’s offshore and marine fabrication specialist Yantai Raffles Shipyard Ltd is just like every other company in the world today; working to ride out the global financial turmoil and ensure it is best positioned to profit when the recovery begins.
In June, the company signed a committed three-year term loan facility with the China Development Bank (CDB) that will be used to retire more costly existing bank debt and for working capital.
CDB was established in the mid-1990s to support China’s competitiveness by implementing and supporting the state’s macro-economic policies through the provision of development funding.
“Two of the priority objectives of the company’s current finance strategy are to establish and build upon key banking relationships in China, and to replace short-term bank lines with committed long-term, competitively priced funding arrangements,” says Mai Bo Liang, chairman of the Yantai Raffles board. “In securing this facility with CDB, Yantai Raffles has achieved an outcome that absolutely meets these two core objectives.”
Its most recent results, for the first half of 2009, show growth in revenue and gross profit (up 28.1% and 2.2% respectively) compared to the same period in 2008, with profit after tax up 85% and net profit up 81.5%.
Revenue growth was driven by a higher level of production, it says, as a number of projects moved into the production phase. “The group is now making good progress on the majority of our projects and has reported a satisfactory performance for the first half of 2009,” says CEO and Chairman Brian Chang.
“We are absolutely focused on mitigating delays on our projects by continuously seeking to implement best practices, with the ongoing understanding and support of our buyers. We are receiving a significant number of enquiries for new buildings, and are selectively tendering for projects where we believe we can be competitive and offer value to buyers. These achievements, and many other exciting initiatives, have been implemented over the past 6 months, and we are confident that we will see continuous improvement in the months ahead.”
As part of Yantai Raffles’ efforts to attract new-build work and meet the demands of ever-growing vessel and rig building projects, 2008 saw the debut of the giant gantry crane system Taisun. With a lifting capacity of 20,000t, Taisun is designed to allow Yantai Raffles to take on the most demanding lifting jobs in the world. In April 2008, it set a new world record by lifting 20,133t in a single lift, before carrying out its first commercial lift in November.
This saw it install the 14,000t deck box of COSL Drilling Europe AS’s semi-submersible drilling rig, COSL Pioneer. The deck box was mated onto the columns and hull of the rig in a single operation.
The design of Taisun also meant the lift operation was able to carry on through the strong winds and snow of Shandong’s winter. Yantai Raffles said this was a marked departure from traditional rig building techniques that take place in open water and are more susceptible to adverse weather conditions. Yantai Raffles said the use of Taisun in the construction of COSL Pioneer allowed concurrent construction of the deck box and hull, improving working efficiencies. This saved around two million man-hours, bringing cost savings, and enhancing the safety and quality of the construction process.
“Taisun marks a fresh chapter in offshore engineering and construction,” said Chang, in November 2008. Kolbjorn Akselvoll, vice president of projects at COSL Drilling Europe AS, described the mating project as”the most professional marine operation I have ever witnessed”.
At the time, Yantai Raffles said Taisun had drawn much interest from potential customers, with eight further lifts, each exceeding 10,000t, already scheduled. But the end of 2008 was a long time ago and much has changed since then. Crane sales are down across the board, construction volumes have tumbled and projects have been put on hold or scrapped altogether.
“It is very clear that the lack of debt financing has slammed the break on new projects being developed, but through our strong relations with Chinese banks we are able to offer financing for our prospective clients and this puts us in a very good position to win new projects,” says Niels Haakman, general manager of Taisun.
“Taisun is currently working mainly for our internal projects and munching away at our backlog,” adds Haakman.
“Due to the recent slump in the market however, Taisun will have over capacity in the near future and we are currently actively seeking out opportunities to assist other parties in China and abroad in installing topsides, be they shipyards, owners or operators.”
Demand for Taisun won’t stay subdued forever though, Haakman says. “We are currently seeing increased activity in the planning and design development for floating production units, following on the heels of the high levels of drilling activity of recent years.
“Once these platforms move into the construction stage in the medium to long future, the sheer size and weight of their topsides means that Taisun will be uniquely positioned to assist in the installation of these. The hull depths are such that the option of using traditional shipyard floating cranes is all but eliminated, and even the largest floating cranes will run into boom clearance issues.”
