ASL Marine Reports Increased Third Quarter Revenue
Group revenue of $96.7 million for the 3 months ended 30 September 2016 (“1Q FY2017”) was $20.7 million (27.3%) higher compared to the corresponding period in FY2016 (“1Q FY2016”).
Recognition of shipbuilding revenue is calculated based on project value multiplied by the percentage of completion (“POC”).
Shipbuilding revenue in 1Q FY2017 improved by 26.7% compared to the corresponding quarter mainly due to:
(i) higher POC achieved from the construction of 11 tugs, of which 4 units were completed in 1Q FY2017. Most of these tugs were at inception stage with minimal POC recognised in 1Q FY2016; partially offset by
(ii) lower POC achieved from the construction of OSV and decrease in number of barges constructed, with one barge being completed in 1Q FY2017.
Shiprepair and conversion
Shiprepair and conversion projects are meant to be short term in nature, resulting in revenue recognised only upon completion. With several of our shiprepair jobs being partial conversions, which take far longer than historic jobs to complete (i.e. may not complete within a quarter), revenue from shiprepair and conversions can now be lumpy.
Shiprepair and conversion revenue decreased marginally by $0.5 million (3.5%) to $14.3 million in 1Q FY2017 when compared to 1Q FY2016.
The breakdown of revenue generated from the shipchartering segment are as follows:
Shipchartering revenue was higher in 1Q FY2017 mainly due to higher contributions from operation of tug boats and barges with the commencement of large marine infrastructure projects in Singapore and South Asia in 4Q FY2016 (the “New Charter Contracts”).
Trade sales increased significantly in 1Q FY2017 due to increase in bunker sales and ad hoc services rendered in conjunction with the New Charter Contracts mentioned above.
Similar to shipbuilding, revenue from New Buildings is calculated based on project value multiply by POC.
The breakdown by revenue generated from the engineering segment are as follows:
Engineered dredgers products & dredger
Engineering revenue were higher in 1Q FY2017 mainly due to higher completion of orders for cutting systems and higher POC achieved for coupling system orders.
Gross profit and gross profit margin
Despite increase in revenue, gross profit decreased to $5.2 million and gross profit margin reduced to 11.3% in 1Q FY2017 mainly due to lower profit and profit margin recognised from the OSV and barges constructed during the quarter under review. The Group recorded some overhead overruns for certain OSV in 1Q FY2017. Further, the higher gross profit in 1Q FY2016 included reversal of costs provision for completed projects.
Shiprepair and conversion
Despite the marginal decrease in revenue in 1Q FY2017, gross profit and gross profit margin more than doubled to $3.4 million and 23.8% respectively due to absence of loss incurred on a particular rig repair project recorded in 1Q FY2016.
In line with the increase in revenue, gross profit increased by $0.9 million (76.6%) and gross profit margin increased to 7.6% in 1Q FY2017 when compared to the corresponding period mainly due to:
(i) Higher utilisation rate and lower upkeep costs incurred for tug boats and barges; partially offset by
(ii) Off-hire of an Anchor Handling Tug since July 2016 coupled with lower utilization rate from Anchor Handling Tug Supply vessel (“AHTS”) and change in revenue mix for a certain AHTS from bareboat charter to towage job which generally yielded lower margin in 1Q FY2017.
Gross profit margin of 93.6% achieved in 1Q FY2017 for New Buildings was mainly due to the completion of 2 projects that had their forecasted costs adjusted downwards; offset by provision for warranty costs that corresponds with the completed projects.
The higher gross profit margin of 38.2% in 1Q FY2016 was due to the write-back of warranty provision of $0.6 million in New Buildings. Excluding the write-back, the gross profit margin would have been 26.4%.
Other operating income
Other operating income increased by $0.1 million (9.0%) to $1.4 million in 1Q FY2017 mainly due to additional rental income derived from precast workshops in 1Q FY2017; partially offset by the absence of gain on disposal of plant and equipment from the sale of 4 units of crawler cranes in 1Q FY2016.
Administrative expenses increased by $0.3 million (6.3%) to $5.6 million in 1Q FY2017 when compared to corresponding period mainly due to increase in legal and professional fees incurred for valuation services and corporate exercises.
Other operating expenses
Unrealised foreign exchange loss of $0.8 million in 1Q FY2017 was mainly due to the appreciation of USD and IDR against SGD on USD and IDR denominated liabilities. The unrealised gain in 1Q FY2016 arose mainly due to the appreciation of EUR against SGD on Euro denominated assets.
The loss of $0.4 million recorded by Sindo-Econ group in 1Q FY2017 was due to lower sale of precast products from its concrete precast operations in Indonesia.
PT Hafar derived its profit largely from operation of its pipe lay cum accommodation barge (the “Barge”) which commenced a new charter in August 2016. The share of loss in 1Q FY2017 was mainly attributed to repair costs incurred on the Barge when it was off-hired.
The share of loss from PT CNI was mainly attributable to the low utilisation of its vessels; several of its vessels have remained off-hired mainly due to the slowdown in Indonesia coal mining industry.
Profit before tax
Despite the overall increase in gross profit by $1.2 million (10.4%) in 1Q FY2017, the Group’s profit before tax decreased by 70.1% to $1.7 million (1Q FY2016: $5.6 million). This was mainly due to the increase in foreign exchange loss by $1.3 million; and the decrease in share of results of joint ventures by $3.6 million.