Nam Cheong's Q3 net profit soars 85% to $0.3m

On the back of higher forex gain.

Offshore support vessel builder Nam Cheong Ltd. has reported a $0.3m (RM 760,000) in net earnings for the quarter ending in September, almost twice of its net profit last year which was at RM 410,000.

This is despite the revenue loss, a 86% decline to RM25.8 million from RM189.3 million for the previous corresponding quarter, due mainly to lower shipbuilding revenue recognised.

"Revenue from the shipbuilding segment was 91% lower at RM16.6 million for 3Q 2016, compared to RM182.1 million for 3Q 2015, largely as a result of slower progressive recognition of revenue from vessels sold," the group said.

With this, gross profit decreased 96% to RM 0.8m, compared to RM 21.1m last year.

What buoyed overall bottomline was other income, which rose to RM 15.4m due largely to a higher net foreign exchange gain of RM12.2m.

Its expenses, specifically the selling and administrative costs, declined 34% to RM 10.6m.

Looking forward, Nam Cheong CEO Leong Seng Keat said the group will remain cautious, given that the World Bank has recently announced that it is raising ts 2017 forecast for crude oil prices to US$55 per barrel from US$53 per barrel as OPEC members prepare to limit production after a long period of unrestrained output.

“While the World Bank has projected energy prices, which include oil, natural gas and coal, to jump almost 25 per cent overall next year, we remain cautious on the outlook as a recovery in capital spending may not emerge so soon. As such, we anticipate the progress of vessel sales and shipbuilding activities to remain slow moving into 2017," Leong explained.

Due to this, the group has deferred the schedule of deliveries of its vessels currently under
construction, both at customers' requests and also at the its initiative.