Climate Change Data

Environmental Metrics

Social Achievements

• Strengthened employee humanistic care, built workers' sports and leisure center to enrich leisure life for workers and strives to create a culture of safety production, working and living environment; in hot season, sending cooling gifts to workers to ease the high temperature, showing car for the health of the employees.

Governance Achievements

• Developed Shanghai Zhenhua Heavy Industry Co., Ltd Insider Information Management System. After the inspection, the staffs who know the insider information didn’t trade the stocks of the company before significant price information is disclosed.

Climate Goals & Targets

Environmental Challenges

• The market structure was effectively adjusted, and the reform as deepened, the layout was gradually optimized and the ability to allocate the global resources was improved. Various business sectors achieved remarkable results while the profit increased steadily.
• Severely affected by the falling international crude oil price, the global marine industry developed slowly and the new contract amounts signed decreased on yearly basis in the market.
• The domestic economic grew slowly in 2015 while the international market is readjusted, but the port machinery market made a breakthrough in the stable situation, mainly relying on the port automation projects in Qingdao and Yangshan and orders from several important customers , such as PSA, DPW and Maersk.
• The recent years witnessed the weak trade growth, which has direct impact on the investment of the port.
• The decreasing oil price caused pressure on the entire marine industry chain since 2015.
• In 2016, the company will face greater challenges in the marine industry market exploration.

Mitigation Strategies

• The Company Board of Director and the management led all the employees to deeply implement “4321”and “1521”strategy and fully apply the 24 letters principle: “firm foudations, always innovate, adjust structure, change mode, integrate resources, reinforce management, develop culture and increase quality”.With focus on the enhancement of operation quality and core competitiveness, the Company aim to build a world-class company with international competition strength base on the assurance of the company′s stable and healthy continuous development in new state, reform and development.
• In 2016, the Company plans to achieve steady growth in revenue, and signs more new orders, implements "insist on the innovation and development, the coordinated development, the green development, open development and sharing development"; insist on five development concepts to accelerate the innovation, mergers and acquisitions, digitalization and internationalization development r, focus on reform and innovation, deepen the organizational structure adjustment, reduce the cost and improve the efficiency, consolidate the foundation, enhance the operation quality, accelerate the integration of resources, increase the gross profit margin, to ensure the stable development of the company in new common state, reform and development.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• The global shipping market is readjusted, the port machinery market is maintaining an usual level, the domestic market needs time to develop. We can see that the needs of traditional port machinery reached saturation when the automatic equipments need is rising.
• The global market of ore and oil development keeps declining, and it won’t be recovered in a short time.
• The world economic and trades conditions are in downturns, Britain exited from EU and other members want to follow it, which makes the situation more puzzling. Many shipping lines are in dilemma.
• The Hanjin shipping Co. bankrupted, the MAERSK Group needed to be reorganized, the three top shipping companies must consolidated as well as Zhongyuan and Zhonghai. These changes had an influence on the market and investment on port construction. So, the port machinery market will definitely be in huge pressure.
• The global shipping market is readjusted, the port machinery market is maintaining an usual level, the domestic market needs time to develop. We can see that the needs of traditional port machinery reached saturation. The total needs are declining, so the operation and competitiveness will be worsening.
• The marine market has kept declining over two years, the company now is facing huge pressure on difficulties in manufacturing ships, financing and making new orders.
• The world economic development is still in the deep adjustment period, the consumption of oil and gas is not so good, now we can see that the supply exceeds demand.
• The rental of marine equipments became lower and lower so do the newly made ships and the used ones. Even the price of oil and gas increase and the explosion of oil and gas became better, the recovery weak state will continue for a long time because of the surplus of oil platforms and marine supported ships.
• Delay, be put on ice and even cancel projects and orders will become common.
• The lack of structural supply, technology and manufacturing experience in high-end marine region, on advantages in low-end marine region.
• The financial sector’s protection, transportation cost and etc. bring challenges to the steel structural industry.

Mitigation Strategies

• facing the market challenges at home and abroad, the Company will deepen the reform, consolidate the basic management and enhance the risk resistance, focus on “1.5.2.1”for optimal adjustment of market and business structure; to promote the four transition from selling products to sell excellent products (Technology); from selling equipment to selling system; from selling hardware to selling software (service); from the production mode, management mode, the business model in Industry 2.0 change to new model, profit model innovation in Industry 4.0, promote structure adjustment and resources integration, drive structure adjustment and resource integration; drive enterprise sustainable development by transformation and upgrade.
• Develop rational planning for forward rate look, control exchange rate risk, emphasis on research on policies and strategies of foreign exchange risk management, pay close attention to change in exchange rates, regularly complete analysis of exchange rate movements, conduct strict implementation of financial derivatives related to the approval process, produce good statistics on product current exchange rate, further reinforce the basic work of foreign exchange management, and reduce the company’s exchange rate risk.
• By arranging favorable settlement terms in the contract (such as the signing of a contract with the RMB exchange rate pegged, increase the prepayments proportion plus early settlement, etc.), or within the range permitted by the country’s financial foreign exchange policy, make use of hedging, foreign exchange factoring and other appropriate financial instruments or means to control and lock the exchange rate risk.
• As for credit risk, by reducing raw material reserves, compression of infrastructure spending, adjusting the company’s debt structure through a variety of ways (such as medium-term notes, short-term bonds), reducing financing costs, strengthening the collection of accounts receivable, gradually reducing the amount of bank debt, reduce business risks.

Supply Chain Management

Climate-Related Risks & Opportunities