China: Pingtan Marine Posts Results for First Quarter of 2013
Pingtan Marine Enterprise Ltd., a provider of dredging services in the People’s Republic of China (PRC) and territorial sea fishing globally, today announced its unaudited financial results for the first quarter of 2013.
– Completed landmark business combination in February 2013, creating Pingtan Marine Enterprises, one of the largest U.S.-listed marine services operating company in China;
– Currently operates a fleet that consists of 9 dredgers and 40 fishing vessels;
– Dredging segment (“China Dredging”) continues transition to primary contractor with a backlog of $214.5 million as of March 31, 2013;
– Fishing segment (“Merchant Supreme”) reported 26.4% growth in revenues during Q1 2013 and launched 20 vessels during December 2012 (with revenues beginning to ramp up on those vessels in the second quarter of 2013).
Mr. Xinrong Zhuo, Chairman and CEO of the Company, stated, “The last several weeks have been a monumental period in our Company’s history, as we believe our team has created a diversified entity in the global marine service market. We remain very optimistic about the growth opportunity in both of our dredging and fishing segments. We are very pleased to have generated strong cash flow from operations and profitability in our first quarter during a transitional period for our Company.”
Dredging Segment Operating and Financial Review
Mr. Zhuo continued, “In our dredging business, we continue to leverage our long-term customer relationships, many of whom have worked with China Dredging since its inception. One of our goals in the coming years will be to build upon this strong base of projects and further diversify by transitioning from a sub-contractor for projects in the PRC to the role of a general contractor. We have invested considerably in our Build-Transfer (BT) strategy, which will expand the pipeline and give China Dredging more control over its projects. Our first project in Kemen Industrial Zone of Lianjiang County, Fujian Province, began in January 2013 and is estimated to continue for 18 months. While this investment directly affected our first quarter financial results, as a result of incurring advanced payments with minimal revenue contribution, we expect to begin realizing the full impact from this project in the second quarter of 2013.”
For the three months ended March 31, 2013, revenue from the dredging services decreased to $26.7 million from $59.5 million in the same period last year. This was primarily as a result of decreased dredging volume caused by the Company’s termination of the leasing agreement for three dredgers in July 2012 and one in December 2012, as these four dredgers were not fit for the Company’s new BT project, which has a higher unit price.
In addition, four of the Company’s vessels working on a project in northern China were operated at only 30% of their dredging capacity due to unusually inclement weather conditions during the first quarter of 2013.
As a result of these factors, China Dredging completed 12.7 million cubic meters of dredging volume in the first quarter of 2013 compared to 32.5 million in the same period last year, a decrease of 60.9%. As of March 31, 2013, the Company has a backlog of $214.5 million, which included $15.6 million in new contracts for the first quarter of 2013.
Press Release, May 15, 2013