Nam Cheong deferring deliveries and focusing on costsCompany News // February 26, 2016
Nam Cheong Limited recorded revenues of RM950.0 million and a net profit of RM27.9 million for the full year ended 31 December 2015.
Datuk Tiong Su Kouk, Executive Chairman of the company, said: "Along with the rest of the offshore and marine industry, we have been affected by the severity of the global down-cycle in oil prices, as can be seen from the lower
level of vessel orders and the impact to our financials over the past year.
“National and international oil companies have recently announced plans to further reduce their capital and operating expenditures, along with the deferment of projects. Closer to home, Petronas has also understandably taken similar steps.
"Having expanded our footprint across the world in the years before, our revenue exposure to Malaysia is now lower as compared to the past. However, as a global OSV builder, our business is inescapably affected by events and economic factors around the world. As such, we anticipate the pace of vessel sales and shipbuilding activities to
In a statement, the company said it was deferring delivery of vessel currently under construction, and remained committed to optimising operational and financial flexibility. The company's orderbook stood at RM1.2 billion as at 31 December 2015.
Leong Seng Keat, Nam Cheong’s Group Chief Executive Officer, said: "Given the challenging outlook of the industry and business environment, we have battened down the hatches and will continue to focus on calibrating our cost
structure to ride out this storm.
"In addition, at the request of our customers and at our own initiative, we have deferred the schedule of vessel deliveries that are currently under construction. Over the shorter-term, challenges of oversupply in oil will likely take some time to rebalance. In the mid to longer-term however, we believe prospects for the OSV market remain encouraging."