SINGAPORE (Aug 15): Shipbuilder Nam Cheong has sunk deeper into the red, reporting a loss RM2.1 billion ($670 million) for the half year ended June, compared to a loss of RM37 million in the same period a year ago.
This comes as a result of an assets impairment and write-down of RM2 billion over the period under review – comprising impairment on property, plant and equipment, investment in associate, investment properties, trade and other receivables of RM487.9 million, as well as inventories written down of RM1.51 billion.
For 2Q, the group posted a loss of RM2 billion compared to earnings of $0.3 million in 2Q16.
Revenue for the half year grew sevenfold to RM169.1 million from RM24 million in 1H16 due to higher contributions from the shipbuilding segment which was mainly attributable to the sale and delivery of two vessels in 2Q17.
The vessel chartering segment also registered higher revenue contribution on the addition of three vessels to the chartering fleet in the latest quarter to boost group revenue over the half year.
Meanwhile, other income declined 31% to RM5.7 million due to the absence of a net fair value gain on derivatives of RM2.5 million which was recorded in 1H16.
Finance cost grew by RM6.4 million as a result of lower interest expense being capitalised in cost of construction in 1H17.
At the same time, share of result in jointly controlled entities and associate recorded a loss of RM2.6 million and RM2.4 million respectively in 1H 2017, due to a lower vessel utilisation rate.
Nam Cheong notes that the outlook for the offshore and marine (O&M) sector remains weak, and anticipates the progress of vessel sales and shipbuilding to remain slow.
The group says it will continue to monitor and review the shipbuilding schedule together with deferment and cancellation plans, through ongoing communication and consultation with its stakeholders.
It adds that it has also taken steps to review its options to restructure its businesses, operations and balance sheet to preserve value for the stakeholders of the company.
Trading of shares in Nam Cheong have been suspended.
