KUALA LUMPUR (June 21): Silk Holdings Bhd, which saw its first quarter net loss more than double to RM16.07 million, said it is hard to indicate as to when it can return to profitability but foresees 2017 to be a better year for the group.
 
Executive chairman Datuk Mohd Azlan Hashim said the outlook for its marine logistics business is more favourable now, while there will be minimal impact from operations of the Kajang Traffic Dispersal Ring Road (SILK Highway), which it has disposed of to Permodalan Nasional Bhd in April.
 
Speaking to reporters after the group’s annual and extraordinary general meetings, Mohd Azlan said its upstream marine logistics business — where it provides vessel charter services in the upstream oil and gas (O&G) industry via AQL Aman Sdn Bhd, the holding company of the 70%-owned Jasa Merin (Malaysia) Sdn Bhd — “is not worse off” compared with 2016.
 
He said for one, the overall utilisation rate of its fleet of 21 vessels have currently stabilised to 50%, from a level that was lower some time in 2016, while further noting “tenders for activities in the upstream sector and which Silk Holdings is participating in, are increasing”.
 
As for the downstream division which the group began operating in June 2016, the full-year financial contribution from this sector, particularly from the deployment of all of its three tankers, will finally be reflected, Mohd Azlan said.
 
“Also, we are not that impacted by the operations of the highway (SILK Highway). We were affected for the entire 12 months in FY16 (financial year ended Dec 31, 2016), but as we completed the disposal exercise in April this year, the impact will only be reflected for the first four months of this year,” he added.
 
In FY16, the highway division incurred depreciation and amortisation costs of RM23.8 million versus the RM17.7 million recorded in FY15, leading to a pre-tax loss of RM6.16 million.
 
However, the group said it was not unusual, given the accounting treatment for assets of highway concession entities, while the division remained cash flow positive.
 
At 4pm, Silk Holdings’ share price stood at 48 sen, valuing the group at RM340.24 million.