SINGAPORE (Nov 14): Nam Cheong, the debt-saddled Malaysian shipbuilder and vessel charterer, sunk into 3Q losses of RM48.6 million ($15.8 million) as the result of the foreign exchange loss and finance costs, compared to earnings of RM0.76 million a year ago.
See: Nam Cheong announces over $300 mil in liabilities; mulls restructuring
See: Nam Cheong to restructure, in blow to Singapore bond market
Revenue for 3Q17 trebled to RM79.1 million from RM25.8 million a year ago. Revenue from the shipbuilding segment more than trebled to RM60.9 million due to the sale and delivery of one vessel. Vessel chartering revenue also recorded an increase of 98% to RM18.2 million mainly due to the addition of three vessels to the chartering fleet during 2Q17.
Gross profit increased nearly fivefold to RM3.9 million.
Other income in 3Q17 declined 78% to RM3.4 million due to the absence of a net foreign exchange gain of RM12.2 million which was recorded in 3Q16.
Finance costs increased to RM27.4 million in 3Q17 as a result of lower interest expenses being capitalised in cost of construction.
Nam Cheong says the outlook for the O&M sector remains weak and anticipates vessel sales and shipbuilding to remain slow.
In response to the challenging business environment, the group has deferred the schedule of deliveries of its vessels currently under construction, both at customers’ requests and also at the group’s initiative.
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.
The group has also taken steps to review its options to restructure its businesses, operations and balance sheet to preserve value for the stakeholders.
Shares in Nam Cheong have been suspended from trading from July.
As at end Sept, total liabilities of the group stood at RM2.41 billion.
The High Court on Oct 27 extended Nam Cheong a six-month moratorium on certain legal proceedings against the group after granting the listed holding company the permission to proceed with debt restructuring under a scheme of arrangement.
See: Nam Cheong applies for scheme of arrangement with High Court
The court also issued several orders pertaining to the six-month moratorium, including court orders against the appointment of a receiver or manager over any property or undertaking of the company.
