More pain in offshore services sector as Nam Cheong, Pacific Radiance sink into red

Ships sit offshore in the Singapore Strait, on Feb 18, 2016.
Ships sit offshore in the Singapore Strait, on Feb 18, 2016. PHOTO: BLOOMBERG

SINGAPORE - Thursday (Feb 25) brought more evidence that the massive hit taken by energy companies from crashing oil prices has trickled downstream to Singapore's offshore services sector.

Support vessel builder Nam Cheong reported a net loss of RM21.5 million (S$7.2 million) for its fourth quarter ended Dec 31, from a net profit of RM41.1 million for the year-ago period, as revenue tumbled 54 per cent to RM241.8 million from RM523.9 million previously.

Nam Cheong said it has deferred the schedule of deliveries of vessels currently under construction, both at customers' requests and on its own initiative. Gross order book was RM1.2 billion at end-2015, with a mix of vessels due for delivery up till 2018.

Falling crude prices has led oil companies to cut their capital expenditure and operating costs over the past year, said Nam Cheong. The outlook for the offshore and marine sector remains weak and the progress of vessel sales and shipbuilding will remain slow, it added.

Nam Cheong's full-year earnings sank 91 per cent to RM28.5 million while revenue halved to RM950 million.

Meanwhile, lower vessel utilisation sent Pacific Radiance to a net loss of US$2.6 million (S$3.65 million) for its fourth quarter ended Dec 31, compared to earnings of US$5.1 million a year ago.

Revenue fell 42 per cent to US$21.7 million from US$37.2 million a year ago.

For the full year, net profit dived 94 per cent to US$3.8 million after revenue fell 29 per cent to US$121.8 million.

Nam Cheong did not declare a final dividend compared to a 1.5 cents per share payout last year, while Pacific Radiance cut its final dividend to 1 cent per share from 3 cents a year ago.