Aker Tulcea: orders will start to fall in 2008

The level of orders in the naval constructions industry – the scene of strong growth over recent years – will start to fall in 2008, according to a number of players on the market. Recent years have seen a high number of orders for shipyards, which in some cases needed to boost staff numbers to meet the demand.

“Last year, the value of naval transportation began to decrease and this will also trigger a drop in orders for new ships. The slump will be felt as late as 2008, however, since most shipyards have orders covering production for 2006 and 2007,” Dumitru Ivanov, general manager of Aker Tulcea shipyard, told Ziarul Financiar.

The price of naval transportation is the key element taken into consideration by shipowners and the banks that finance them in the construction of new ships. This cost is also used to calculate the investment amortisation term. A drop in this price means lower revenues for shipowners and therefore lower investment.

“The lower volume of orders will not affect us very much, since we are specialised in three different product segments, and it is quite unlikely that all three will regress. The main segment we have focused on is that of specialised ships, supplying marine platforms – a narrow, but quite profitable sector for us. In addition, we also manufacture commercial ships and transport ships, and as a back up we have a fourth sector, offshore constructions, which we started working in over recent years,” explained Ivanov.

“At the same time, we have cut our work force below the level we need at this moment and we are working a lot with subcontractors, which will allow us to absorb a drop in orders more easily,” the Aker Tulcea manager added.

Aker Tulcea shipyard, owned by Norwegian group Aker, is forecasting turnover of 100 million euros this year, nearly 75% higher than last year. For 2006, however, the company expects to exceed 120 million euros due to record levels of production.

“We are trying to reach 100 million euros by the end of the year and we are not far from achieving this. For next year, however, we estimate production will hit a record high, with 18 ships to be delivered, compared with 15 this year,” said Ivanov predicted.

Despite the higher level of sold production, he believes the company will still not post profits this year.

“The main cause is the growth in RON seen in the first half of this year, while in 2005 we finalised a series of projects we began last year. Still, we are confident we will manage to become profitable next year, since all the ships we”ve started building are profitable,” said Ivanov. andrei.chirileasa@zf.ro