ASL Marine has announced a 80% increase in net profit attributable to shareholders on the back of higher other income for the three months ended September 30, 2008.
1Q FY2009 FINANCIAL OVERVIEW
The Group's total revenue increased by 27% to S$118.6 million against the backdrop of higher revenue growth in all the three business segments. This increase is primarily due to the progressive recognition of more and higher value shipbuilding contracts undertaken, increased number of higher value shiprepair jobs undertaken and the increase in ASL Marine’s fleet size for shipchartering.
The Group's gross profit for 1Q FY2009 increased by 15% to S$21.3 million. The Group's gross profit margin of 18% in 1Q FY2009 was marginally lower as compared to 20% in 1Q FY2008 mainly due to lower gross profit margins in the shipbuilding and the shipchartering segments.
The other operating income for the Group had increased significantly from S$1.6 million in 1Q FY2008 to S$11.9 million in 1Q FY2009. This was mainly because of gain on disposal of plant and equipment (this included sale of 7 vessels to third parties under the Group's fleet renewal program) worth S$3.6 million, foreign exchange gain of S$0.7 million and gain on disposal of vessels held for sale for S$6.6 million.
In general the operating expenses remained flat and there was only a slight increase in the administrative expenses for 1Q FY2009 by S$0.6 million to S$2.9 million due to higher manpower costs and increase in select administrative expenses in line with higher business activities.
As a result, the Group's net profit attributable to shareholders surged over 80% to S$23.9 million in 1Q FY2009. The net profit margin also improved significantly from 14% in 1Q FY2008 to 20% in 1Q FY2009. The fully diluted earnings per share increased from 4.62 cents in 1Q FY2008 to 7.95 cents in 1Q FY2009 on a weighted average basis.
"In the current industry scenario where every customer is mindful of the business cost, the Group will concentrate in streamlining its operations and managing customers' expectation in order to remain competitive," said Ang Kok Tian, Chairman and Managing Director of ASL Marine.
Revenue from shipbuilding activities grew by 23% to S$70.6 million in 1Q FY2009. However the gross profit margin for the segment of 10% in 1Q FY2009 was lower as compared to 12% in 1Q FY2008 due to higher costs and provisions on select projects during the quarter. As a result, the gross profit from the segment declined slightly from S$7.0 million in 1Q FY2008 to S$6.8 million in 1Q FY2009.
Revenue from the shiprepair and ship conversion segment witnessed a jump of over 79% to S$23.1 million in 1Q FY2009. The gross profit from the segment registered even a higher growth of 114% to S$7.4 million in 1Q FY2009 due to higher gross profit margin of 32% as the Group undertook a larger number of higher margin jobs.
The Group's fleet size stands at 181 vessels (62 tugs, 4 anchor handling tugs, 1 straight supply vessel and 114 barges) as at 30 September 2008 as compared with 175 vessels (64 tugs, 1 anchor handling tug and 110 barges) as at 30 September 2007. The increase in fleet size resulted in an increase of 8% in revenue from shipchartering to S$24.9 million for 1Q FY2009. The gross profit margin for the segment decreased from 35% in 1Q FY2008 to 29% in 1Q FY2009 mainly due to higher fuel costs and the need to hire more third party’s vessels to meet customer demand. Thus, the gross profit from the segment declined by 12% to S$7.1 million in 1Q FY2009.
The overall business environment of the Group has become increasingly challenging due to the financial market turmoil and gathering global economic slowdown. In view of the violent changes in economic conditions and darkly uncertain challenges ahead, the Group would re-focus particularly with respect to strengthening project execution, cost control and cash flow management. All new proposed capital expenditure is being re-examined. However given the Group financial strength, the Group is in a good position to take advantage of any strategic opportunities that may arise including a widening range of vessels, facilities and other related business.
As at September 30, 2008, the shipbuilding operations of the Group had an outstanding order book of about S$706 million for external customers. The order book comprised 44 vessels, including offshore support vessels such as heavy lift and pipelay vessels, subsea operation vessels, tugs, self-propelled cutter suction dredgers and other vessels. The Group's on-going strategy has been to diversify and balance the shipbuilding portfolio and reduce over-dependency on the offshore oil and gas sector.
The Group also has an outstanding shipbuilding order book of approximately S$27 million for the building of 7 vessels for companies from within the Group. The shiprepair and ship conversion segment registered the highest growth in the quarter. The Group currently has shiprepair and ship conversion facilities to cater to more sophisticated type of vessels.
Underpinned by enhanced docking facilities at its Batam yard and increasing world’s fleet, the Group is cautiously optimistic of the longer term outlook for its shiprepair operations which are subject to short term volatility The shipchartering segment continues to provide sustainable recurring income for the Group. As at September 30, 2008, the Group has an outstanding order book of about S$19 million long term (duration of more than a year) shipchartering contracts.
Approximately 23% of the Group's shipchartering revenue is derived from long term chartering contracts. The Group also intends to increase its shipchartering fleet by taking delivery of 20 vessels worth approximately S$48 million, including towing tugs and Anchor Handling Towing/ Supply vessels (of which 7 vessels worth approximately S$27 million are being built internally). The shipchartering operations will continue to focus on the marine infrastructure, harbour and terminal services sectors in Singapore, South-East Asia, the Middle-East, India as well as Australia.
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