SINGAPORE - Triyards Holdings, a vessel builder for the beleagured oil & gas industry, sank to a US$63.3 million loss in its third quarter ended May 31 from a profit of US$4.1 million for the year-ago period.
Revenue in the third quarter fell 62 per cent to US$30.9 million from US$82.1 million a year ago, the company said in a filing with the Singapore Exchange on Friday (July 21).
The biggest hit came from a US$45.1 million allowance for impairment of assets. Triyards said that "due to the prolonged depressed state of the oil & gas industry as well as the extremely competitive market environment, the carrying value of certain assets was negatively impacted."
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 US.
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.
Triyards said that the next 12 months "will be extremely challenging in terms of business environment which would result 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 rationalize 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 its current financial year, the group posted a net loss of US$67.5 million from a net profit of US$15.6 million for the year-ago period as revenue dropped 16 per cent to US$192.8 million.
This was on the back of lower contributions from 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 unit of scientific research vessel, two units of oil tankers and one unit of a floating dock.
Tiyards said that as it pushes ahead with its diversification strategy away from non-oil and gas related projects, it sees continued interest for its offerings, notwithstanding the competitive and challenging environment.