SINGAPORE (Aug 23): Nam Cheong swung back to profitability in 1H18 with earnings of RM0.6 million ($0.2 million) compared to its RM2.1 billion loss in 1H17 after restructuring a substantial amount of trade debts with its creditors, resulting in a waiver of debts amounting to RM557.5 million.
For the 2Q ended June, the Malaysian shipbuilder reported RM0.35 million in earnings, reversing from its 2Q17 loss of RM2 billion a year ago.
Revenue for 1H fell 20% on-year to RM135.8 million from RM169.1 million with lower contributions from the shipbuilding segment, due to the progressive recognition of revenue from the sale and delivery of vessels under construction during 1H17.
Cost of sales fell 21% to RM117.8 million from RM149.9 million previously.
Finance costs widened to RM27.4 from RM16.1 million in 1H17 as a result of lower interest expenses being capitalised in cost of construction in the latest half-year under review.
Share of result in joint ventures and associate recorded net losses of RM0.7 million and RM3.7 million, respectively, in 1H18 due to a lower vessel utilisation rate.
In all, gross profit fell by 7% to RM17.9 million from RM19.2 million a year ago despite an improved total gross profit margin for 1H18.
Nonetheless, the group highlights that its vessel chartering segment had shown significant improvement by registering a gross profit of RM9.2 million in 1H18, reversing form a gross loss of RM0.3 million in 1H17, driven by the segment’s revenue growth.
Tiong Su Kouk, executive chairman of Nam Cheong, says trading of Nam Cheong’s shares will resume today and that the group will continue to press on with its growth plans.
“Whilst we have made significant progress in our restructuring efforts, we recognise that industry challenges remain. Cost and capital structure optimisation remains a top priority and we will continue to tighten control for sustainable long-term growth,” says Tiong.
Shares in Nam Cheong last traded at 2 cents on July 20 before calling for a voluntary trading suspension.
