July 4, 2005

Labroy to start building F & G design rigs?

A Reuters report from Singapore says that Labroy Marine expects to get an order for iits first offshore jackup rig this year--and expects to book two more next year. The report says Labroy plans to enter a partnership with Friede & Goldman--a subsidiary of Russia's OMZ group.

Labroy has been booking record orders. Its Labroy Shipbuilding and Engineering unit today signed a Singapore $169 million (US$100 million) contract to build 6 sophisticated offshore vessels for an undisclosed client. The first five vessels are scheduled for delivery in 2007. The sixth is to be delivered in 2008. The contract signed today also has an option valued at another Singapore $118 million for 4 more vessels. The option is to be confirmed by the client in 2007 for vessel deliveries in 2008 and 2009.

This is the largest contract announced by Labroy to date. Last week, the Group announced another major shipbuilding contract worth S$117 million (US $70 million).

Labroy Shipbuilding and Engineering, together with its wholly-owned subsidiary PT Nanindah Mutiara Shipyard, operate the largest shipyard in Batam, Indonesia. Batam is situated southeast of Singapore and can be easily reached by ferry in about 30 minutes.

The yard covers an area of 37 hectares and has a very large berthage of 1,500 meters. Its three floating docks are supported by numerous cranes, covered workshops, open fabrication yards and three newbuilding berths. Supporting services are provided by subcontractors from both Singapore and Batam.

Commenting on the latest orders, Mr Tan Boy Tee, Chairman and Managing Director of Labroy said, "Labroy's current order book for building of new vessels now stands at a record S$634 million and this would keep our shipbuilding division busy until 2008. With the offshore industry still going very strong, we are experiencing strong demand for our shipbuilding expertise. We believe the demand is sustainable going into 2006 and we remain confident of securing more shipbuilding contracts in the current year."

Labroy's shipping division is also expected to turn in a record performance in FY2005 compared to FY2004. Shipping rates have improved over the past six months and this has benefited Labroy whose vessels are on relatively short-term charters. Most recently, Labroy was able to increase the charter rates for its offshore vessels by 10%.

"Barring any unforeseen circumstances, Labroy is confident of achieving record earnings in 2005 and such confidence is boosted by the strong demand for vessels that we are experiencing from our customers. Investors would have a better idea of our growth potential for the next 12 months when we announce our half-year results", Mr Tan added.

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