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Nam Cheong sinks to loss on lower revenue and assets impairment

Nam Cheong sinks to loss on lower revenue and assets impairment
Malaysia’s OSV builder Nam Cheong has sank to a loss for the financial year 2016 on a 82% year-on-year plunge in revenue and assets impairment.

Net loss for 2016 was recorded at MYR42.77m ($9.64m) as against the profit of MYR27.93m for 2015, Singapore-listed Nam Cheong announced.

Full year revenue plummeted to MYR170.42m from MYR950.03m in the previous financial year due mainly to fewer number of offshore vessels delivered.

Nam Cheong took provisions of MYR91.2m mainly consisting of inventories write down and impairment on investment in associate, deposit and prepayment written off and impairment on property, plant and equipment.

Nam Cheong noted that the outlook for the oil and marine sector remains weak and the group anticipated the progress of vessel sales and shipbuilding to remain slow.

“To better manage the challenges and to reduce cash outflows, we have deferred the delivery of vessels that are currently undergoing construction at our customers’ requests and at our own initiative,” said Leong Seng Keat, group ceo of Nam Cheong.

Leong added: “Due to an underinvestment in both capex and opex during the past two years which has affected the availability of oil reserves in the longer term, oil majors are likely to increase their spending to replace reserves in the next few years and the long term outlook for offshore and marine sector remains promising.”

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