Triyards sinks to $86m loss in Q3

Triyards' biggest hit came from a US$45.1 million allowance for the impairment of assets.
Triyards' biggest hit came from a US$45.1 million allowance for the impairment of assets.PHOTO: TRIYARDS

Vessel builder posts marked reversal from $5.6m net profit

Singapore-listed Triyards Holdings, a vessel builder for the beleaguered oil and gas industry, has plunged to a US$63.3 million (S$86.3 million) loss in its third quarter.

The dismal bottom line for the period ended May 31 was a marked reversal from a net profit of US$4.1 million (S$5.6 million) in the same period last year.

The counter sank 6.9 per cent, or 1.1 cents, to close at 14.9 cents after releasing the results in the early hours of yesterday.

Third-quarter revenue fell 62 per cent to US$30.9 million, the firm said in a filing with the Singapore Exchange yesterday. The biggest hit came from a US$45.1 million allowance for the impairment of assets.

"The prolonged depressed state of the marine and oil and gas industries, coupled with the fiercely competitive market environment, has negatively impacted the carrying value of assets across the industry," said Triyards chief executive Chan Eng Yew.

Triyards also allowed for US$8.3 million in doubtful receivables from entities of its parent Ezra Holdings, which either face a potential going-concern issue or have filed for Chapter 11 bankruptcy in the United States.

The company said it anticipates that certain financial covenants of certain loan agreements would be in breach by the end of its 2017 financial year. "The group will engage with the relevant banks for further action as it would be required by the banks," it said.

  • AT A GLANCE

  • NET LOSS: US$63.3 million
    (comparison not meaningful)

  • REVENUE: US$30.9 million 
    ​(-62%)

Triyards said the next 12 months "will be extremely challenging", with the business environment resulting in margin compression as well as difficulty in gaining access to new sources of liquidity.

"In view of the above, the group has undertaken an exercise to rationalise and reassess the carrying value of certain assets of the group. These assets were acquired or developed by the group previously with plans and intentions to deploy for new projects or business ventures."

For the first nine months of the financial year, the group posted a net loss of US$67.5 million, reversing a net profit of US$15.6 million, as revenue sank 16 per cent to US$192.8 million.

The much weaker figures came on the back of lower contributions from its strategic marine group for the construction of aluminium vessel projects and significantly lower contributions due to the completed deliveries of five self-elevating units over the past 12 months.

The decreases were partially offset by contributions from two units of multi-purpose support vessels, three units of chemical tankers, four units of escort tugs, one scientific research vessel, two oil tankers and one floating dock.

Triyards said that as it pushes ahead with its diversification strategy, it sees continued interest for its offerings, notwithstanding the competitive and challenging environment.

A version of this article appeared in the print edition of The Straits Times on July 22, 2017, with the headline 'Triyards sinks to $86m loss in Q3'. Print Edition | Subscribe