Marco Polo Marine swings to net loss in Q4 on investment impairment

MARCO Polo Marine, which has locked horns with Sembcorp Marine over a rig construction contract, swung to a net loss in its fourth quarter on investment impairment, it reported on Friday.

The marine logistics firm said net loss for the three months ended Sep 30, 2015 stood at S$3.04 million, compared to a net profit of S$2.53 million a year ago.

This was mainly due to an S$8.22 million impairment in an investment in an jointly controlled entity, BBR. Marco Polo Marine's revenue also fell 35 per cent to S$15.2 million, hit primarily by its ship chartering operations. The drag was due in part by the lower utilisation of the group's tugboat and barge fleet, given continued weakened shipping demand in the regional market for the shipment of coal and other commodities.

Given the volatile - and lower - oil prices that comes amidst uncertain political, economic, and social developments, the offshore oil and gas exploration and production activities in the region should remain muted, Marco Polo said.

It did not comment directly on the recent dispute with Sembcorp Marine (SembMarine) but said appropriate announcement will be made by the company as and when it deems fit.

SembMarine's PPL Shipyard is resisting a contract termination by Marco Polo Marine's unit, MP Drilling.

MP Drilling alleged that PPL failed to comply with certain material contractual obligations. It also cited cracks found on all three legs of the new rig during two rounds of tests. This was notwithstanding repair works carried out by PPL after the first round of tests, said MP Drilling.

Besides not wanting to take delivery, MP Drilling said that it was seeking refund of the initial payment of about US$21.4 million.

SembMarine responded that PPL disagreed with MP Drilling's allegations and that it would regard the case as a repudiatory breach of the contract.