SINGAPORE (Feb 27): Nam Cheong announced earnings of RM9.7 million for the 4Q ended Dec 2018, reversing from its loss of RM987.5 million in 4Q17 mainly a result of a waiver of debts.
With the latest set of quarterly results, the group has returned to profitability in FY18 with RM963.3 million in earnings as opposed to a RM3 billion loss for the previous year.
Revenue for the latest quarter grew 39% to RM99.4 million, buoyed by higher shipbuilding margins, as well as growth in contributions from the vessel charting segment due to the addition of seven vessels to the chartering fleet during 2018.
Other income grew to RM47.8 million from RM17 million in 4Q17, mainly due to a waiver of RM43.8 million in debts.
Meanwhile, selling and administrative expenses fell by 4% to RM8.8 million due to continuous effort in cost rationalisation.
Finance costs decreased by RM24.1 million in 4Q18 to RM5.8 million as a result of the adjustment of interest expense in accordance with the Scheme of Arrangements.
See: Nam Cheong launches rights issue to raise up to $29 mil to fund cash-out option for creditors
Share of results of equity accounted joint ventures and associate recorded losses of RM0.5 and RM 4.7 million respectively on 4Q 2018 due to the protracted low vessel utilisation rate.
In all, gross profit margin for FY18 rose 14 percentage points to 25%, more than doubling from 11% in FY17.
In its outlook, Nam Cheong says it expects increased demand for anchor handling towing supply (AHTS) vessels, platform supply vessels (PSVs), as well as accommodation and maintenance vessels.
It also intends to continue monitoring and reviewing the shipbuilding schedule, together with deferment and cancellation plans, for its remaining vessels which have yet to be delivered.
“In response to the uptick in the O&M activities in Malaysia, the group has been deploying its vessels for charter in Malaysia, thus the vessel chartering segment is expected to continue its growth momentum,” says group CEO Leong Seng Keat.
“We remain firmly focused on operational excellence whilst prudently capitalising on compelling opportunities to build a sustainable business that generates value for Nam Cheong’s investors,” he adds.
Shares in Nam Cheong closed 16.7% higher at 0.7 cent on Tuesday.
