Marine & General Bhd announced its results for the quarter ended 30 June 2017 by reporting a revenue of RM 37.8 million. The Company also reported an impairment charge of RM 48.9 million resulting in a loss before tax (“LBT”) for the quarter of RM 78.3 million.
This performance is lower compared to the revenue of RM 41.2 million and LBT of RM 20.6 million recorded for the corresponding quarter the year prior.
On a year-to-date basis, the Group recorded revenue of RM 68.5 million, a 22% decline compared to the RM 88.1 million recorded in the previous corresponding six-month period. In line with lower revenue and the impairment charge incurred, the Group recorded a higher LBT of RM 112.4 million, compared to the loss before tax of RM 27.9 million recorded in the previous corresponding 6-month period.
Despite the operating loss, as a result of the disposal of the Group’s entire shareholding in Sistem Lingkaran Lebuhraya Kajang Sdn Bhd (“SILK”) for a total consideration of RM 390 million, the Group recorded a Profit After Tax and Minority Interest (PATMI) of RM 337.2 million for the quarter ended 30 June 2017, compared to a Loss After Tax and Minority Interest (LATMI) of RM 16.9 million recorded in the previous corresponding quarter.
Consequently, on a year-to-date basis, the Group recorded a PATMI RM 321.3 million, compared to the LATMI of RM 24.6 million recorded in the previous corresponding 6-month period.
The Marine Logistics – Upstream Division’s revenue performance of RM 23.6 million for the quarter is 37% lower compared to the performance recorded in the previous corresponding quarter, reflecting the challenging operating environment prevalent for providers of offshore support vessels (“OSVs”). The comparatively lower revenue for the quarter and the impairment charge incurred, translated into a LBT of RM 81.1 million, an increase to the RM 18.5 million recorded in the previous corresponding quarter.
On a year-to-date basis, the Marine Logistics – Upstream Division recorded a revenue of RM 43.3 million, 48.7% lower compared to the RM 84.5 million recorded for the previous corresponding quarter. The lower revenue performance, brought upon by lower activity levels during that period, and the RM 48.9 million vessel impairment charge contributed to the LBT position of RM 116.7 million, up from the LBT of RM 27.3 million recorded for the corresponding 6-month period previously.
The average utilisation rate of 47% for the quarter, arising out from the continuing market oversupply for OSVs, is marginally below the 50% utilization rate recorded in the previous corresponding quarter. On a year-to-date basis, the Marine Logistics – Upstream Division recorded an average utilization rate of 40%. In the previous corresponding 6-month period, the Division recorded an average utilization rate of 56%.
The Marine Logistics – Downstream Division’s recorded revenue of RM 14.2 million for the quarter and a pre-tax loss of RM 0.6 million. Given that this Division began operations in June 2016, the comparison to the previous year’s corresponding quarter is not meaningful.
On a year-to-date basis, Marine Logistics – Downstream Division recorded revenue of RM 25.2 million and a pre-tax loss of RM 0.77 million.
With all three vessels chartered out, the Marine Logistics – Downstream Division recorded an average utilization rate of 88% for the quarter. This is significantly above the 47% utilisation rate recorded in the previous corresponding quarter. On a year-to-date basis, the Marine Logistics – Downstream Division recorded an average utilization rate of 84%. Given that this Division began operations in June 2016, the comparison to the previous year’s corresponding year-to-date period is not meaningful.
Marine & General Bhd executive chairman Datuk Azlan Mohd Hashim commented, “There is increasing activity within the offshore support services industry, as evidenced by the tenders being called by the oil majors. The Division saw improvement in fleet utilisation rates from 35% in April to 48% in June 2017. Utilisation rates for the Division continues to see improvements since the end of June and there is expectation that this trend will persist for the remaining quarters of the 2017, as exploration and drilling activities resumes in a measured way in the second half of 2017.”
“Moving forward, taking into account the successful completion of the disposal of the Company’s entire interest in SILK, the Board expects that it will be able to devote significantly more focus, resources and effort to improve the financial and operating conditions in both Marine Logistics Divisions generally, as well as further enhance the competitiveness and growth prospects of the Marine Logistics – Downstream Division.”
“The Company is also expected to undertake several other changes in the coming months, to better reflect its newfound focus in the core business going forward. The Board is fully aware of the challenges but remains confident in the long-term prospects of both divisions as well as that of the Company as a whole,” he concluded.