SGX listing benefits Kreuz Holdings; 3Q revenue jumps 6%

The subsea solutions company raked in US$13.6m for the quarter while its gross profit margin doubled to 34.9%.

Profit attributable to equity holders of the company also increased marginally by 1.2% to US$0.9 million in 3Q.

Kurush Contractor, Executive Director and CEO of Kreuz Holdings, said: “I am heartened by the steady progress the Group has made since our listing in July this year. We have a strong order book of approximately US$115 million, in addition to leveraging on the expertise of our management team as well as strong relationship with end-customers, we have been actively bidding for new projects to further strengthen our track record in the field.

“Tapping on the positive trend of the oil and gas industry, we will look out for viable opportunities for growth. By maintaining a high standard of operational excellence and quality and cost effective services, we seek to further develop the Group’s penetration into our existing markets in Asia Pacific and India, as well as explore opportunities in emerging markets like the Middle East.”

The Group’s cost of sales declined by approximately 16.7% or US$1.7 million from US$10.6 million in 3QFY2009 to US$8.9 million in 3QFY2010. The decline in cost was due mainly to the decrease in rental of vessels and equipment as the Group now owns two work accommodation barges and a saturation diving system.

The Group’s gross profit increased by approximately 114.6% to US$4.8 million in 3QFY2010 from US$2.2 million in 3QFY2009. Correspondingly, gross profit margin increased from 17.3% in 3QFY2009 to 34.9% in 3QFY2010. This is attributed by higher gross profit margins projects in 3QFY2010.

The decrease in net profit margin by 0.8% to 9.5% in 3QFY2010 from 10.3% in 3QFY2009 was due mainly to the recognition of one-off IPO related expenses of approximately US$1.0 million in 3QFY2010. If IPO related expenses were excluded, the net profit margin would have been 15.6% for 3QFY2010. As at September 30, 2010, the Group had cash and cash equivalents of approximately US$15.1 million.

Prospects for the offshore exploration and development in the oil and gas sector appear healthy. A recovery in the global economic outlook coupled with relatively stable oil prices is expected to encourage capital expenditure, which in turn should result in an increase in demand for the Group’s subsea services.

In addition, the company's subsea services stands to benefit from the increasing inspection, repair and maintenance (“IRM”) work in relation to the growing number of older offshore installations that require such maintenance.