Singapore Shiprepair Yards To Report Only Modest Gains

Singapore's two ship-repair yards, Keppel Hitachi Zosen Ltd. and SembCorp Marine Ltd., are expected to report modest profit growth after almost two years of restructuring and consolidation. Keppel Hitachi Zosen is expected to turn in profit of about $19.5 million for 1999 after a $38.3 million loss for the nine months ended December 1998, analysts said. SembCorp Marine, due to release results next Monday, should post a 10 percent rise in earnings of between $46 million and $47.2 million against 1998 profit of $42.3 million. Squeezed by rising land and wage costs, Singapore's shipyard industry underwent a consolidation in 1997 and 1998 that saw the main players reduced to two from four. SembCorp Marine was formed by a merger between Jurong and Sembawang Shipyards in mid-1997 while Keppel Shipyard and Hitachi Zosen (Singapore) completed their merger in 1999. Both yards have made some progress in reducing costs through retrenchments undertaken in November, when SembCorp Marine let go of 249 employees and Keppel Hitachi cut 132. However, analysts see choppy waters ahead for the industry as cheaper shipyards in the Middle East and China continue to prove keen competition through expanded capacity and lower prices.