Aker Braila shipyard is to build six oil tankers for a series of Cyprus-based companies in a 130 million-euro contract concluded by the Norwegian Aker Yards, the owner of the shipyard.
Construction of the vessels will begin next year and is scheduled for completion in 2006-2007, and, excepting for marketing and design costs, the contract will not influence the 2004 results, said the Aker Braila management.
The company is expecting 1-1.5 million-euro net profits for 2005, while turnover should reach 40 million euros. This compares with 0.4 million euros in net profits this year and a 25 million-euro turnover.
Romanian shipbuilders have recently received an increasing number of orders.
The reason for this is the economic growth in Asia (in particular China and Japan) which has led to an unprecedented rise in maritime trade and convinced ship owners to expand their fleets. On the other hand, this high level of demand from China comes with a side effect: raw materials - steel sheets - are more expensive.
Initially, the company hoped for 0.9 million euros in net profits this year, but will make less due to the increase in raw material prices for both steel sheets and pipes and the ROL's appreciation against the euro. The increase in the ROL is expected to affect the company's financials.
"The construction of a ship's hill takes at least 5 or 6 months and the construction of an entire ship takes more than 12 months. When you stock up on supplies, you might buy the raw materials at an exchange rate of 41,000 ROL to the euro, for instance; if, by the time you finish the ship and deliver it to the client, the exchange rate has dropped to 38,000, you are obviously losing money due to currency appreciation since payment is made on delivery," explained Daniel Stan, the company's financial director.
He added that although the derivative financial instrument market was still in its infancy, Aker Braila was looking into the possibility of using such instruments to protect itself against unfavourable exchange rate fluctuations.
catalin.ciocan@zf.ro
