The Hong Kong-listed company attributed the loss mainly to the delivery of new models of vessels that had experienced defects, forcing the company to pay repair costs, penalties and defect claims to shipowners.

Rectification work and delays caused by certain shipowners interrupted the production schedule.

The company re-negotiated with some buyers to extend delivery and had offered reduced pricing. In 2010, the company booked HK$342.2m ($43.9m) in respect of the delay.

In total, the company is involved in three separate arbitration processes concerning seven vessels and could face having to return up to HK$1bn to the customers in for principal payments and associated interest payments.

As of the end of December 2010, China Ocean Shipbuilding had secured orders for 20 vessels, excluding the vessels in arbitration, with an orderbook extending to the end of 2012.

The company said the prospects for the year ahead remained uncertain and said that given the imbalance between supply and demand in the market, it would be "very difficult" to get new orders with favourable terms.