Singapore-listed offshore services provider, Nam Cheong posted a profit of MYR10.5 million (USD2.6 million) for the second quarter ended 30 June 2015, lower as compared to profit of MYR63 million in 2Q14.
Similarly, the company’s revenue went down 49% to MYR192.7 million in 2Q15 from MYR378.8 million in 2Q14, while gross profit dropped 54% to MYR30.6 million in 2Q15 as compared to MYR66.9 million in 2Q14.
The decrease was partly due to the lower number of vessels delivered in 1H15 of seven vessels as compared to 12 vessels delivered in 1H14. Moreover, the company experienced lower vessel utilisation rate in 2Q15 that affected its charter income, while its shipbuilding segment saw lower progressive recognition of revenue from the sales of platform support vessels.
During the 2Q15, Nam Cheong saw higher expenses in terms of finance costs, which hiked by 72% year-on-year to MYR6.3 million due to issuance of additional Medium Term Notes (MTN) in 3Q14. In addition, selling and administrative expenses increased to MYR25.8 million in 2Q15 from MYR8.9 million in 2Q14 due mainly to the net foreign exchange loss and increase in marketing expenses.
Leong Seng Keat, chief executive officer of Nam Cheung expects growth in shallow waters activities despite a “rollercoaster ride” in oil prices in 2015, as more oil fields are coming on stream than those being decommissioned.
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Meanwhile, Leong seeks business opportunities in the Anchor Handling Tug Supply (AHTS) market as the available AHTS vessels in the market are ageing and in need of replacement.
According to IHS data, 24% of the global AHTS fleet excludes the United States and Canada, and is more than 25 years old and requires replacement. The data also highlights that AHTS vessels that are less than 10 years old get to enjoy 28% better utilisation than vessels that are more than 10 years old.
“Currently, we still have two outstanding AHTS and we are confident of selling them at the right values,” said Leong.
However, Leong is less optimistic on the Accommodation Work Barge (AWB) market as he concluded that the demand cycle is coming to an end in Malaysia and opined that the next cycle should start around the 2017-2018 period.
Despite the overall bearish market sentiment, Leong told IHS Maritime that the company has seen more enquiries in the 2H15 as some clients found more short term jobs in offshore market and wish to engage Nam Cheung for services.
“I see an increasing trend of more activities and enquiries in the market, which is encouraging,” added Leong.