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Nam Cheong slips into the red in first half

Nam Cheong slips into the red in first half
Malaysian offshore vessels builder Nam Cheong has been hit by a first half loss as revenue dived, despite snatching a slim profit in the second quarter.

Net loss for the first half ended 30 June 2016 was recorded at MYR37.45m ($9.36m), as against the profit of MYR49.81m in the previous corresponding period.

First half revenue nosedived by 95% year-on-year to MYR24.32m due mainly to a reversal of revenue from Perdana Petroleum’s cancellation of an accommodation work barge and lower number of vessels delivery.

Nam Cheong, however, posted a second quarter profit of MYR2.67m compared to the bigger gain of MYR10.48m in the year-ago period.

“While oil prices have rebounded from the lows since the beginning of the year, the offshore and marine industry continues to be under pressure. This has invariably affected the flow of OSV orders,” said Tiong Su Kuok, executive chairman of Nam Cheong.

“We continue to be prudent by tightening our cost management, and are glad to note that our shipbuilding segment’s gross profit margin has improved during the second quarter,” Tiong noted.

The outlook for the oil and marine sector remains weak and the group anticipates that the progress of vessel sales and shipbuilding to remain slow.

In response to the challenging business environment, Nam Cheong has deferred the schedule of deliveries of its vessels currently under construction, both at customers’ request and at its own initiative. The group has a gross orderbook of approximately MYR1.1bn as at June 2016, comprising a mix of OSVs due for deliveries up to 2018.