Cosco Corp (Singapore) Ltd may phase out its dry bulk shipping business as it concentrates on high-yield projects and develops its shipyard and marine engineering operations.

'It is possible to phase out dry bulk business, there are no plans for expansion of this segment,' Cosco Singapore vice chairman and president Ji Hai Sheng told reporters at a briefing late yesterday.

While he said there was no immediate decision or a timetable to do so, the volatile and cyclical nature of the business was becoming a concern to investors.

Last year, revenue from Cosco's shipyard and marine engineering business grew by 45 pct year-on-year, while its dry bulk sales rose a marginal 1.7 pct due to weaker freight rates. Nonetheless, group net profit for the period still jumped 28 pct to 205.35 mln sgd, supported by the strong business at its shipyards.

The firm's decision to focus on it shipyard and marine engineering business has led to a consistent stream of orders for ship, oil rig repairs, ship conversions, and the building of oil-related vessels such as floating storage and off-loading and floating production, storage and offloading vessels.

To move up the value chain in the oil and gas related business, Ji said the firm could eventually go into rig building.

'At the present time we have made a lot of studies on oil rigs. There is big demand.

'The direction of our shipyard is we will put first priority for the oil-related business,' he said.

Given the robust outlook for the oil and gas industry, Cosco is confident that the group's performance this year will be even better than last.

Already, its current order book stands at 1.33 bln sgd, of which 982 mln sgd was secured in the first one and a half months this year.

'In 2007, new facilities and significant capacity increases coming on stream will allow the group to further penetrate into the niche markets of high value offshore marine engineering work,' Ji added.

(1 usd = 1.53 sgd)