ASL Marine Holdings Ltd., an integrated marine company offering comprehensive services in shipbuilding, shiprepair and conversion, shipchartering and dredging engineering, reported revenue of S$68.5 million and net profit attributable to shareholders of S$3.0 million for the three months ended 30 September 2014.
Total Group revenue of S$68.5 million for 1QFY2015 was 53.8% lower year-on-year (yoy) compared to 1QFY2014, as lower revenue was generated from shipbuilding division, and shiprepair and conversion division. The decrease was partially offset by the higher revenue from engineering division.
Revenue from shipbuilding segment decreased by 77% to S$23.7 million as most of the shipbuilding projects undertaken in the previous financial year were either completed or delivered, or near completion, thereby reducing the amount recognized for this quarter.
Revenue from offshore support vessels, dredgers, and tugs declined, while barges and other vessels brought in relatively higher revenue.
The overall business climate for the shipbuilding industry has been challenging due to less demand and the over capacity issue. Coupled with the recent slide in oil prices, demand for construction of new offshore supply vessels is expected to reduce thereby resulting competition in the offshore oil and gas market to heighten and the Group has experienced some challenges in securing new orders.
Shipbuilding margin expected to continue to remain weak due to the depressed pricing and rising labour costs.
As at 30 September 2014, the Group had an outstanding shipbuilding order book from external customers of approximately S$298.7 million for 24 vessels, which will be progressively delivered up to 1QFY2017. The order book comprised Offshore Support Vessels, AHTS, tugs and barges.
“Market conditions remained weak, and the recent decline in oil prices exacerbated it. While competition has been fierce, we still secured new projects. However, vessel owners are demanding for better products at lower prices, and margins for the new vessel contracts were squeezed,” said Ang Kok Tian, Chairman and Managing Director, ASL Marine.
“In addition, as new building projects have just started, the percentage of completion is low, resulting in lower revenue recognition in the quarter.These projects will add to the revenue stream in the coming quarters as they carry on.
“Looking ahead, we expect the market will remain tough and challenging in remaining part of FY2015, however, we think the demand for charter of vessels will improve as port expansion and marine infrastructure in the region are going on.
“The Group remains strategically committed to maximizing deployment, enhancing and renewing its fleet to better meet customers’ needs. With the enlarged fleet size and improved yard infrastructure, the Group will be well positioned to weather the market downturn, and capture the growth when it picks up in the next cycle.”