Blame it on cascading number of orders.
The offshore and marine firm has been caught in a maelstrom together with the rest of the industry due to the global downcycle in oil prices, resulting in a 90% drop in net profit to RM27.9m in 2015.
According to a press release by Nam Cheong, the lower level of vessel orders was the haymaker that brought down their financials over the past year.
Datuk Tiong Su Kouk, executive chairman of Nam Cheong, said the firm is inescapably affected by economic factors around the world, and it anticipates the pace of vessel sales and shipbuilding activities to remain slow.
Meanwhile, overall revenue for Nam Cheong also decreased by 51% to RM950m from RM1.9b last year, due to a reduction in the shipbuilding business segment’s earnings.
“This resulted from a lower number of vessels that were completed and delivered, from 24 in FY2014 to 11 during the year. As such, the shipbuilding business segment’s revenue decreased 51% to RM905.6 million from RM1.8 billion in FY2014,” the release said.
“The vessel chartering business segment’s revenue declined by 50% to RM44.4 million in FY2015 from RM88.1 million in FY2014, due primarily to lower utilisation rate during the year. Nam Cheong’s gross profit dipped by 60% to RM150.0 million during the year, in line with the lower top-line registered, while gross profit margin was 16% as compared to 20% in FY2014,” it added.
Do you know more about this story? Contact us anonymously through this link.