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Coastal posts profit, sees better prospects for high-spec OSVs

Coastal posts profit, sees better prospects for high-spec OSVs
Offshore services contractor Coastal Contracts has managed its operations well to eke out a slight net profit gain despite 27% drop in revenue for the first quarter as better margins at both the shipbuilding and chartering divisions helped to squeeze out reasonable gains.

First quarter net profit rose 1% to MYR31.1m ($10.2m) from MYR30.8m previously while revenue fell to MYR168.9m from MYR232.8m.

Pre-tax profit margin at the Shipbuilding Division rose to 18% from 14% in the previous period on higher margins from the sale of vessels. Only four vessels were delivered in the current quarter compared to seven in the first quarter of 2012, leading to the drop in revenue but suggesting that better selling prices were achieved for each unit.

The Chartering Division on the other hand performed well on both counts seeing revenue double to MYR4.2m from MYR1.9m in the first quarter of 2012 due to higher income from the charter of offshore support vessels (OSVs) as well as better margins from more bareboat charters and lower administrative expenses. This was a turnaround from the previous corresponding quarter when the division actually suffered a loss from a combination of lower income earned, loss on foreign exchange transactions and impairment loss on financial assets.

Coastal is optimistic about its prospects going forward. "The global oil and gas upstream capex spending on exploration and production is expected to rise in 2013 compared with the lacklustre spending in 2012," it said in a stock market announcement.

Coastal also expects the demand for OSVs to grow, especially for more sophisticated vessels. It aims to capitalise on this by building and selling more technologically advanced and deepwater-capable harsh environment OSVs.

TAGS: Offshore