KUALA LUMPUR (March 26): Marine & General Bhd (M&G) posted a net loss of RM11.04 million on the back of revenue of RM50.34 million for the third quarter ended Jan 31, 2020.

There is no comparison figures due to a change in financial year end from Dec 31 to April 30, effective from the period ended April 30, 2019.

In a bourse filing, M&G said for the nine months ended Jan 31, 2020, the group posted a net loss of RM31.62 million, on the back of revenue of RM158.69 million.

In its upstream division, M&G said the increasing demand for offshore support vessels for the past two years, has pushed up the charter rates for a modest increase during the third quarter. 

“The division deployed 21 vessels including four third party vessels during the period, and attained 70% fleet utilization for the current period and 71% for the cumulative period,” it added. 

Additionally, M&G said the division has restructured its borrowings, which will bring more flexibility to its financial operation, and in turn, the restructuring has eased the division’s financial obligations, having paid an upfront cash of RM50 million and extending the tenure to up to 10 years.

In line with improvements in the operating environment and its borrowings, the division has reduced its loss before taxation (LBT) to RM10.6 million for the third quarter, while revenue totaled RM36.39 million.

For its downstream operations, M&G said it achieved 84% vessel utilization during the quarter period and 76% in the cumulative period.

The division recorded RM1.8 million LBT for the third quarter and LBT of RM4.1 million for the nine-month period, mainly due to lower-than-expected utilization and charter rates earned for two tankers which were deployed on an intermittent basis.

On prospects, group executive chairman Datuk Mohd Azlan said the oil and gas (O&G) industry continues to be challenging, as there are many disruptions that could dampen the recovery momentum during this period. 

The challenges are low charter rates due to vessel oversupply, which may affect the ability of many OSV operators to keep operating their vessels. 
 
“There has also been a steep drop in oil prices in recent weeks as a result of declining demand due to the impact on global economy arising from the spread of coronavirus. 

“More recently, the failed attempt between OPEC and Russia to rein in oil production in order to mitigate oversupply and maintain the oil price has exacerbated the decline in oil prices,” he said in a separate press statement. 

Noting that demand for Marine Logistics, its  Downstream Division’s liquid bulk carriers have been fairly robust throughout 2018 and 2019 which mirroring the demand for clean petroleum products, Mohd Azlan expected this trend to continue this year. 

“The group is of the opinion that there is further growth opportunities within this segment and will continuously be evaluating opportunities for additional investment in the future. This, however, will only be undertaken after a thorough assessment of the projected long-term returns and the available resources”, Mohd Azlan said 

The share price of M&G closed unchanged at 5.5 sen, bringing the group a market capitalisation of RM39.81 million.