This article first appeared in The Edge Financial Daily on June 27, 2019

KUALA LUMPUR: Yinson Holdings Bhd’s net profit in its first quarter ended April 30, 2019 (1QFY20) fell 17.5% to RM49.85 million from RM60.43 million in the same quarter last year, as it accounted for a higher portion of profit to non-controlling interests.

This, coupled with lower revenue and higher administrative expenses, offset the effects from higher share of profit of joint ventures and other operating income, as well as lower finance costs in the period, according to Yinson’s quarterly results filing with Bursa Malaysia yesterday.

Quarterly revenue was down 11.13% to RM209 million from RM235.18 million last year, as lower contribution from the offshore and marine segment offset the topline gains from other operations.

“The decrease [was] mainly due to the effect of cessation of revenue contribution from FPSO Allan’s charter at Olowi field in Gabon, higher impairment loss on trade and other receivables and net unfavourable foreign exchange movement, set off by lower depreciation and amortisation,” said Yinson.

Earnings per share for 1QFY20 slipped to 4.55 sen from 5.55 sen in 1QFY19.

Note that the pre-tax profit for the floating production storage offloading (FPSO) vessel operator in the quarter was 5.47% higher at RM79.68 million, from RM75.54 million previously.

The increase, it said, was mainly attributable to lower depreciation and amortisation, net favourable foreign exchange movement, higher share of results in joint ventures, lower finance costs and higher interest income.

The positive contributions were set off by lower profit contribution on weaker revenue upon FPSO Allan’s charter cessation at the end of last financial year, impairment loss on trade and other receivables and higher tax expenses, it added.

On prospects, Yinson said it is optimistic that the industry will replenish its production capacity with new FPSO awards in the current financial year to counter the lagging investment effect from the past years.

In a separate statement, Yinson chairman Lim Han Weng highlighted that the group has a strong balance sheet with cash and bank balances of RM1.7 billion.

“Yinson recently participated in a number of FPSO project tenders in a bid to broaden our market share. With Yinson’s strong track record and healthy balance sheet, we are optimistic that we are able to compete alongside other global FPSO operators for the bids that we have entered into, particularly in Brazil and the African region,” said Lim.