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The Group posted a 6.4% increase in revenue to USD104.2 million for the second quarter ended 30 June 2018 ("2Q18"), from USD97.9 million in 2Q17 on the back of higher contribution from the container shipping business segment.
Container volume handled grew 12.8% year-on-year, from 306,700 TEUs in 2Q17 to 346,000 TEUs in 2Q18. In line with this, the Group recorded a 7.5% rise in container shipping revenue to USD95.9 million, compared to USD89.2 million in 2Q17.
Revenue from the bulk & tanker business decreased 19.5% to USD5.9 million in 2Q18, from USD7.3 million in 2Q17, due to the smaller tanker fleet operated resulting in lower number of vessel employment days year-on-year.
The Group's cost of services increased 9.4% to USD100.1 million in 2Q18, from USD91.5 million in 2Q17, in line with the rise in container shipping activity, higher bunker prices and charter-hire costs.
With the increase in cost of services outpacing revenue growth, the Group recorded gross profit of USD4.1 million, compared to USD6.4 million in 2Q17.
Marketing & administrative expenses rose 17.3% to USD3.6 million, compared to USD3.1 million in 2Q17. The Group's marketing & administrative expenses are mostly incurred in SGD and strengthening of the SGD against the USD had resulted in higher expenses in USD term. In addition, the Group has recorded a higher provision for doubtful debt of USD0.3 million in 2Q18 as a result of the adoption of SFRS(I) 9 which requires the Group to recognise the lifetime expected credit losses for its trade receivables.
Taking into account the above factors, the Group recorded a net profit of USD0.8 million for the quarter, compared to USD3.2 million in 2Q17.
Trade receivables increased as a result of higher business activities and longer credit term given to customers. The increase in trade payables is in line with the higher business activities.
Operating conditions in the regional container shipping industry are expected to remain demanding. The escalating trade dispute between US and China is creating uncertainties and the impact of the various tariffs and counter-measures may see a lowering of global trade.
The market for dry-bulk cargo continues to strengthen, as evidenced by the uptrend in the Baltic Dry Index since the start of the year. The Group will continue to monitor the market for an opportune time to expand its business activity in this area.
The Group's 51%-owned warehousing services joint venture in Port Klang, Malaysia, is progressing on schedule. Construction of the warehouse has been completed and operations are expected to commence in the third quarter of 2018.
The Group will continue to maintain prudent management of its vessels, and focus on improving asset utilisation and operational efficiency to ensure that it remains competitive in the midst of the challenges faced by the industry.