Coastal Contracts’ 3Q profit falls 56% on inventory write-down

by **Cals** Thu 26 Nov 2015, 19:40

Coastal Contracts’ 3Q profit falls 56% on inventory write-down

By Tan Siew Mung / The Edge Financial Daily | November 26, 2015 : 10:16 AM MYT

This article first appeared in The Edge Financial Daily, on November 26, 2015.

KUALA LUMPUR: Sabah-based offshore support vessel (OSV) fabricator [size=16]Coastal Contracts Bhd ([You must be registered and logged in to see this image.] Valuation: 3.00, Fundamental: 3.00)’s net profit fell 56.23% to RM23.75 million in the third quarter ended Sept 30, 2015 (3QFY15), despite a near quadrupling in its quarterly revenue, due to a write-down of inventories to net realisable value.

It recorded a net profit of RM54.3 million in last year’s corresponding period, its filing with Bursa Malaysia showed. Its 3QFY15 revenue came in at RM921.2 million, 3.96 times higher than RM232.4 million in 3QFY14, primarily due to the delivery of its first jack-up drilling rig to a major oil and gas (O&G) player for about RM841 million.

Meanwhile, its net profit for the nine months ended Sept 30 (9MFY15) fell 17.93% to RM124.49 million from RM151.68 million in 9MFY14, again due to the write-down of inventories to their net realisable value. Revenue, however, surged 105.32% to RM1.44 billion from RM699.48 million in 9MFY14.

The company said it will put on hold its plan to venture into the drilling industry in the near term until the recovery of oil price.

In a separate statement, Coastal Contracts executive chairman Ng Chin Heng said the group’s sizeable order book allows it to weather the challenging environment.

“Additionally, the recurring income stream from the long-term charter of our jack-up gas compression service unit, which is targeted to commence in 2016, would contribute towards enhancing our financial performance going forward.”
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