Rotary engineering Q2 profits plunge 72% over weak oil prices, slowdown

SINGAPORE - Profits for the second quarter plunged at oil and gas infrastructure service company Rotary Engineering, as many of its major projects reached completion and relatively few new projects were clinched.

Net profits for the three months ending June 30 was S$3.703 million, down 72 per cent from the corresponding period the year before.

Revenue was S$67.38 million, down 65 per cent.

For the first half of the year, net profits fell 61 per cent to S$10.77 million while revenue fell 60 per cent to S$156.77 million.

Revenue for the quarter fell because several major projects reached completion, Rotary said.

It has also been impacted by the protracted weakness in oil prices, chairman and managing director Roger Chia Kim Piow. There have been "delays in the award of projects as the oil majors and terminal operators adopt a cautious approach towards their infrastructure plans," he said.

The dip in revenue was cushioned by an improved gross profit margin of 25 per cent, up from 17 per cent the year before. This improvement was due to project closures and the company's productivity improvement efforts, it said.

For the first half of the year, other income increased from S$1.6 million to S$5.2 million due to gains on disposal of investments, the company said.

Earnings per share for the second quarter was 0.7 cents, down from 2.3 cents a year ago.

Net asset value per share at June 30 was 44.7 cents, down from 45.2 cents at Dec 31.

No dividend was declared for the quarter.

The company said that a protracted weakness in oil prices might bring about increased competition for projects. This, coupled with a tight foreign labour market in Singapore, would pressure its margins.

It said it has placed greater focus on managing costs due to the uncertain business environment, and has trimmed operating and administrative costs in line with revenue. It also said it was on the lookout for investment opportunities in businesses that complement its existing activities.

The company was also actively seeking out business and investment oportunities in Asean and the Middle East, it said.