Singapore shipbuilding group ASL Marine has posted a sharp drop in net profit for its third quarter as revenues from its shipbuilding, shiprepair and chartering segments fell across the board.
Net profit for the three months to March 31 plummeted 65.7 per cent from the previous year to S$1.94 million, while revenue dived 56.2 per cent to S$63.42 million in the period.
Revenue decreased 56% year-on-year to S$63.4 million due to industry downturn and construction cycle, gross profit increased 20% year-on-year to S$12.1 million for 3QFY2015 despite the fall in revenue, says a company statement.
The drop in revenue was mainly because of the industry downturn and the ship construction cycle, the company said in a Singapore Exchange filing, noting that its shipbuilding segment actually incurred a gross loss in Q3 due to an overrun in subcontractors' costs.
However, that loss was offset by better profit margins from its ship repair and conversion segment, due to the completion of a one-off special project, ASL Marine said.
As at 31 March 2015, the Group had an outstanding shipbuilding order book from external customers of approximately $257 million for 18 vessels, comprising AHTS, tugs, a Seismic Support Vessel and a tanker. These vessels will be progressively delivered up to the second quarter of FY2017.
ASL Marine chairman and managing director Ang Kok Tian said, "Lower oil prices have led to fewer new shipbuilding orders for offshore support vessels. As oil majors cut their capital expenditure budgets, newbuilding projects have slowed down, been put on hold, or have been cancelled. While the shipbuilding segment encountered a setback in late 2014 due to the harsh business environment, there has been stabilized progress at our other segments."
Ang said its ship chartering results were stable as non-offshore related vessels, such as tugs, work barges, dredgers, and tankers, were less impacted by the offshore market, and the vessels benefited from the lower logistics costs brought by lower oil prices.