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ASL Marine halves Q2 losses to S$4.16m due to cost reduction

MAINBOARD-LISTED ASL Marine managed to halve its second-quarter losses as a result of cost reduction. The company noted that the volatile business environment has presented short-term headwinds but prospects for the mid to long term are positive.

The company's losses stood at S$4.16 million for the quarter ended December, down 54.6 per cent year-on-year from S$9.15 million, as cost of sales and administrative expenses declined 24.3 per cent and 37.6 per cent respectively.

Loss per share for the quarter was 0.66 Singapore cent versus 1.45 cents for the preceding year, according to financial results filed on Friday.

The improved results came in spite of a 17.7 per cent drop in revenue to S$78.27 million. Top line contributions from the shipbuilding and ship repair, conversion and engineering services segments were lower because fewer higher-value ships and ship repair services were recognised.

In contrast, its ship-chartering reported higher revenue, mainly due to infrastructure projects in the region, including one of the overseas infrastructure projects which resumed operations during the reporting quarter.

It is noteworthy that the company's gross profit margin for charter was higher in the quarter because utilisation rate for towing jobs of offshore support vessel (OSV) increased. But grab dredgers' (classified as barges) charter rates and utilisation rates declined.

Net asset value per share as at end-December was 22.68 Singapore cents, lower than the 24.94 cents last June.

In its statement, ASL said: "While oil prices are higher than they were compared to 2016, the price of WTI crude oil has fallen to about US$52 per barrel in January 2020. Recent crude oil prices were showing signs of weakness as volatility climbed amid Covid-19 fears despite improved sentiment following the 'Phase One' US-China trade deal."

Also, it flagged political and trade tensions as downside risks to global economic growth that might weigh on its financial performance.

Still, the company was sanguine about its prospects in the longer term. "The positive outlook is that infrastructure spending in select Asian regions is expected to increase, as China implements the Belt and Road Initiative in the countries along the route."

Urbanisation in emerging markets should also boost spending for vital infrastructure sectors including water, energy and transportation. "This represents mid- to long-term opportunities for the group's business."

ASL's auditors had raised a "material uncertainty" last year about the group's ability to continue as a going concern when ASL's current liabilities exceeded current assets by S$20.8 million for the year ended June.

The group reported net current liabilities position of S$10.5 million as at end-December, and it said that the financial statements were prepared on a going concern basis. The validity of the financial statement preparation basis is premised on it being able to generate sufficient cash flows from operations to meet working-capital needs and the continuing availability of credit facilities from its lenders.

ASL shares closed flat at three Singapore cents on Friday before the results were announced.