Marco Polo Marine responds to Sias over wage and bonus rise despite revenue drop

SINGAPORE – Marine logistics company Marco Polo Marine said the increase in its wages, salaries and bonuses in financial year 2024 is “in line with the expansion plans” that the group took in recent years.

It was responding to questions from the Securities Investors Association (Singapore), or Sias, ahead of its annual general meeting on Jan 17.

Sias asked the company to justify its “significant increase” in wages, salaries and bonuses from $8.2 million in financial year (FY) 2023 to about $11 million in FY2024, given that total revenue fell by 3 per cent, including a substantial drop from ship repair.

Marco Polo Marine replied that a large part of the bonuses paid out in FY2024 was based on the group’s performance in FY2023, when its revenue and adjusted profit after tax went up by 48 per cent and 83 per cent year on year, respectively.

It highlighted that even though revenue declined in FY2024, gross profit and adjusted net profit after tax rose 6 per cent and 4 per cent respectively year on year.

It noted that one of its three docks was used exclusively for the building of a commissioning service operation vessel (CSOV) from May to August 2024, reducing the group’s capacity for revenue-generating ship repairs.

Sias asked the company whether the completion timeline for its CSOV shifted from the first quarter to October 2024, and then to the first half of 2025.

It also wanted to understand the operational challenges or technical complexities in the design and construction phases.

The company responded that the CSOV is “in the final stages of completion and slated to be ready by end February”. It cited the shortage of skilled, experienced labour in early 2024 as a factor for the delay. That issue has been largely resolved.

Marco Polo Marine also confirmed that construction of the CSOV has remained within the initial budget of US$60 million (S$82 million).

Sias queried how the company would compete against Chinese shipyards, given that their reopening has lowered demand for ship repair. The company replied that while demand for such services initially declined, it has since “returned to normal”.

“In FY2024, the average utilisation of our docks for ship repair was 91 per cent, compared to 84 per cent in FY2023,” it added.

Sias noted that the company announced on Jan 2 that its audited financial statements contained “certain material reclassification differences”, compared with its unaudited financial statements, with those differences amounting to as much as $6.5 million.

The company had said that these adjustments were made as the non-controlling interest balance required an adjustment to correct an arithmetic discrepancy, to which Sias asked for further details.

Marco Polo Marine said there was an overstatement of the group’s non-controlling interest balance against its foreign currency translation reserves in its FY2024 results announced on Nov 28, 2024. A reclassification adjustment was thus needed to correct the non-controlling interest balance.

Sias also asked for the key strategic initiatives that would drive growth in the offshore support vessel segment.

In response, the company pointed out that governments in Asia have set “ambitious, multi-year policy targets” to meet their offshore wind energy demands.

“The sector’s potential for growth is substantial, as many of these projects are still in the early stages or have yet to begin.”

The company thus intends to expand its exposure to the offshore wind-energy sector in Asia.

Shares of Marco Polo Marine closed 1.8 per cent lower at 5.5 cents on Jan 17.

THE BUSINESS TIMES