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Weak O&G market drags Scomi into $3m loss for Q1FY17

Weak O&G market drags Scomi into $3m loss for Q1FY17
Transport solutions focussed Malaysian group Scomi Group turned to a MYR12.2m ($3.0m) loss in the FY2017 first quarter ended 30 June 2016 from a MYR9.7m profit previously on much lower revenue.

Revenue fell 38% to MYR237.6m from MYR379.9m in the previous corresponding quarter on falls in the oilfield services and marine services division amid the slump in the oil and gas (O&G) sector, the company said in a stock market announcement.

Oilfield services revenue fell almost half to MYR155.0m from MYR283.8m previously due to lower drilling activities in Malaysia, Indonesia, Myanmar, Middle East and West Africa. Scomi noted that customers have been cautious in their drilling plans due to low oil prices resulting in activities being deferred or delayed.

As a result the division posted a segment loss of MYR3.8m compared to a MYR20.4m profit previously due to lower profit from operations with fixed costs.

The marine services division recorded slightly lower revenue of MYR49.6m compared to MYR50m previously due to low utilisation of offshore vessels.

This segment widened its losses to MYR10m from a loss of MYR2.4m previously also due to lower revenue and fixed costs.

Looking ahead on prospects for the oilfield and drilling services arms, Scomi said: "We expect the weakness in the oil prices to impact our revenue in the coming quarters. Unless there is a significant upward movement in the oil prices, activity is likely to remain soft resulting in delay of projects and capex spending and greater pricing pressures."

Meanwhile the market for the marine services division "continues to remain challenging, and demand for vessels is weak", Scomi said.

"Management will focus its efforts in managing costs as well as expanding marketing efforts across a wider geographical area. Competition in this area will remain tough but management remains focused on prioritizing utilisation of our vessels," Scomi concluded.