KUALA LUMPUR (Aug 23): Dayang Enterprise Holdings Bhd's net loss widened to RM48.1 million in the second quarter ended June 30, 2017 (2QFY17) from RM1.95 million a year earlier due to lower charter rates, impairment losses and foreign exchange losses.
Its bourse filing showed that quarterly revenue dropped 1.3% to RM191.02 million from RM193.58 million.
"The slight decrease in revenue and the higher loss before tax incurred in the current quarter is mainly due to lower charter rates. In addition, the loss before tax in the current quarter has taken into account of impairment loss on property, plant and equipment of RM50.4 million and net realised/unrealised foreign exchange loss of RM16.5 million," Dayang said.
As for the cumulative six months of FY17 (1HFY17), Dayang sank deeper in the red with a net loss of RM90.8 million, versus the RM28.34 million recorded in 1HFY16, although revenue improved by 1.2% to RM308.93 million from RM305.41 million, attributed to higher value of work order received and performed in the period under review.
"Despite that, the group registered a higher loss before tax for the financial period ended June 30, 2017 mainly due to an impairment loss on property, plant and equipment of RM50.4 million and net realised/unrealised foreign exchange loss of RM24.5 million as compared to a net realised/unrealised foreign exchange loss of RM10.1 million in the corresponding period-to-date," the group explained.
Moving forward, Dayang said business activities in the topside structural maintenance (TSM), hook-up and commissioning (HUC), engineering procurement construction and commissioning (EPCC) and offshore support vessels (OSV) services improved in 2QFY17 with the gradual increase in work orders from oil companies.
The utilisation rate for the fleet of vessels improved from 24% in 1QFY17 to 62% in the 2QFY17, bringing the average fleet utilisation to 44%.
"However, the increased activities and the profits generated from the maintenance contracts and the higher vessel utilisation in the second quarter was negated somewhat by the reduction in the charter rates of a few vessels and the group continues to be dragged by impairment and unrealised translation loss in foreign exchange in Perdana Petroleum Bhd," it said.
"Nevertheless, the group and its board of directors are committed to navigate through these stormy waters and to ensure the group's continued sustainability and to ride through this prolonged down cycle in the oil and gas market. The group is cautiously confident of turning around its loss making OSV subsidiaries with the impending relisting of PPB (Perdana Petroleum), scheduled before the end of September 2017," it added.
Further, Dayang said it will continue to leverage on its balance order book of RM2.3 billion, especially within the core competencies of TSM/HUC/EPCC contracts and OSV charters for the rest of this year till 2019.
"The TSM, HUC and EPCC should see more renewed activities over the next few years by oil majors and the group should likely benefit from this. The group is currently awaiting the results of some tenders for jobs amounting to RM4 billion," said the group.
"Any successful win in this should see a replenishment of order book for a further five years. Though we cannot predict the outcome of these tenders, the group has always demonstrated operational track record and has a clear market leadership in the Brownfield services segment," it added.
Amid all the challenges and a difficult oil and gas industry, Dayang said it remains vigilant and will continue to exercise due care and prudence in the running and administration of the company's business.
Dayang closed up 1.1% or 1 sen at 88.5 sen, valuing it at RM853.86 million.