Marine & General Berhad (M&G) saw its profit before taxation (PBT) of RM12 million for the quarter ended 31 October 2023 reduced by almost half of its PBT of RM23.6 million in the same quarter last year.
In statement today, it said that the decrease was mainly due to the non-recurring depreciation adjustment made in the preceding year corresponding quarter following the increase in useful life of its OSV fleet from 15 years to 20 years.
“This adjustment was to align M&G with industry practices and with Petronas’ extension of the vessels service life to 20 years,” it said today (Dec 15).
This, it said is at the back of a revenue of RM91.8 million, representing 11.9% increase compared to the revenue recorded in the preceding year corresponding quarter.
“This improvement is in line with an increase in operating level during the current quarter. Accordingly, the fleet utilisation for both Upstream and Downstream Divisions was 81% and 91% respectively as compared to 74% and 86% respectively, in the corresponding quarter last year.
“The Upstream Division continued as the main revenue contributor, generating 74% of the group’s revenue, while the Downstream Division generated the balance 26%,” it added.
M&G executive chairman Tan Sri Mohd Azlan said the group’s main businesses correlate to and is significantly affected by the outlook of the oil and gas industry, which is expected to continue its recovery.
“The Upstream Division looks forward to an active year in line with Petronas’ positive outlook for its drilling and exploration activities as highlighted in its Activity Outlook for 2023 – 2025.
“The Board expects the vessel utilisation and charter rate increase to continue in the current financial year, although at a slower rate than the previous financial year,” he explained.
In relation to the Downstream Division, Mohd Azlan said the division expects the charter operations to continue to experience higher levels of utilisation in the current financial year, given all the vessels are on time-charter contracts.
“Nevertheless, the Board is also cautious about the potential economic disruption brought about by the geopolitical instability in Europe and the Middle East that could affect the regional and domestic economic climate.
“In view of the foregoing, the Board is cautiously optimistic on the prospects for the rest of the financial year,” he concluded.
For the current 6-month cumulative period, M&G recorded a profit before taxation of RM23.4 million, with a marginal 3.4% increase YoY at the back at RM176.5 million revenue, up by 12.1% increase YoY.
“The increase was in line with higher charter activities and charter rates for both Upstream and Downstream Divisions,” the group said.
Divisional-wise, upstream division reported lower PBT, totalling RM11.9 million during the current quarter compared to RM68.2 million in revenue for the quarter (12% increase YoY) due to the said non-recurring adjustment from the OSV useful life extension.
Meanwhile, the Downstream Division recorded 45% lower PBT of RM1.2 million for the quarter at the back of RM23.6 million in revenue (11.6% increase YoY) mainly due to higher tanker repair expenses incurred during the current periods.
