Shipbuilder Nam Cheong posts massive Q2 net loss of $652m

SINGAPORE - Beleaguered Nam Cheong posted a whopping second quarter net loss of RM2.02 billion (S$652 million), reversing from a profit of RM3 million previously.

This was due to massive asset impairment and write-down totalling RM2 billion for the three months ended June 30.

This can be broken down to the following:

* Asset impairment and write-down amounting to RM1.88 billion;

* Impairment on investment in associate of RM54.4 million; and

* Impairment on amounting owing by jointly controlled entities totalling RM61.8 million.

The accumulated losses have wiped out shareholders' equity, plunging the group into a net liability position.

As at end June, Nam Cheong's net liability per share amounted to 33.4 sen, compared to net asset value of 65.3 sen as at Dec 31.

Loss per share was 96.56 sen against earnings of 0.14 sen previously.

The only bright spot was a 29 per cent rise in revenue to RM151.2 million.

Revenue from the shipbuilding segment increased by 17 per cent to RM133.7 million, mainly due to the sale and delivery of two vessels.

The vessel chartering revenue recorded an increase of 418 per cent to RM17.6 million, mainly due to the addition of three vessels to the chartering fleet during the quarter.

Prospects remain bleak.

The outlook for the oil and marine sector remains weak and the group anticipates heavy going in vessel sales and shipbuilding.

It has deferred the schedule of deliveries of its vessels currently under construction, both at customers' requests and also at its own initiative.

Nam Cheong said it has also taken steps to review its options to restructure its businesses, operations and balance sheet.

It has had ongoing discussions with its principal lenders on restructuring of debts.

Last week, its wholly-owned subsidiary, Nam Cheong Dockyard, was served a writ of summons by AmBank in Kuala Lumpur for RM70.4 million.