Marco Polo Marine's profit sinks by 22%

The weakening of the rupiah against the US dollar led to MPM's share loss of S$0.8m from Bina Buana Raya instead of earning a S$1.2m profit.

Other reasons for the profit decline include higher admin expenses and other operating income. However, all's not lost: Marco Polo Marine reported a 40% YoY rise in revenue to S$31.0m boosted by their shipbuilding and repair operations.

Here's more from OCBC Investment Research:

Marco Polo Marine reported a 40% YoY rise in revenue to S$31.0m but saw a 22% fall in net profit to S$4.2m in 2QFY12, such that 1HFY12 figures accounted for 53% and 49% of our full year estimates, respectively. However, 1HFY12 net profit accounted for 44% of the street’s expectations. Revenue was boosted by the group’s shipbuilding and repair operations, but a drop in other operating income, higher admin expenses and share of loss of associated companies led to a lower bottom-line.

Shipyard dominant revenue driver
Ship building and repair accounted for 80.8% of total revenue in 1HFY12 compared to 60.7 % in 1HFY11. Correspondingly, ship chartering accounted for a smaller share as PT Pelayaran Nasional Bina Buana Raya has been assuming more of the ship chartering business due to the cabotage rule in Indonesia.

BBR’s profits still impacted by forex movements
MPM saw a S$0.8m share of loss from BBR in 2QFY12 and this was mainly due to unrealized foreign exchange losses of S$2.5m that resulted from the weakening of the Indonesian rupiah against the USD in the last quarter. The foreign exchange movements had negatively impacted BBR’s vessel loans which were mainly denominated in USD and SGD. Stripping away the forex loss, BBR would have posted a profit of S$2.5m instead of a S$2.2m loss and MPM’s share of BBR profit would have been S$1.2m.

Ship repair outlook still positive
Going forward, MPM expects the shipyard operations to continue to drive the group’s overall revenue for 2HFY12, mainly from the ship repair side – management mentioned that there has been more enquiries for ship repair, outfitting and conversion services. The group will also set up a JV with Marine Tankers Holdings Pte Ltd to own and manage bunkering vessels.