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The Group recorded revenue of USD62.7 million, a 7.9% decline from USD68.1 million in the previous corresponding quarter ("1Q16"). The decline was due to lower revenue contribution from both container shipping and bulk & tanker business segments.
Year-on-year, volume handled by the container shipping business in 1Q17 held steady at 285,000. Nevertheless, on the back of lower freight rates, revenue fell 7.9% to USD54.7 million in 1Q17.
Compared to a year ago, the fleet size reduced from 11 to 7 ships. Operating on a smaller fleet, revenue from the bulk & tanker business declined by 8.7% to USD6.9 million in 1Q17, compared to USD7.6 million in 1Q16. The impact was partially mitigated by an improvement in bulk carrier charter rates.
The Group's cost of services contracted by 1.4% to USD60.8 million in 1Q17, compared to USD61.7 million in 1Q16. The decline was mainly due to lower cost of operating a smaller bulk & tanker and container vessel fleet, as well as lower charter-in rates. This was partially offset by significantly higher bunker costs incurred in 1Q17 compared to 1Q16.
In light of the above, gross profit dropped 70.7% to USD1.9 million in 1Q17, versus USD6.4 million in 1Q16. Consequently, gross profit margin also fell to 3.0%, from 9.4%.
The Group recorded a foreign exchange gain of USD75,000 in 1Q17, compared to a loss of USD0.5 million in 1Q16, as the US dollar depreciated against the Singapore dollar and other regional currencies.
Consequently, the Group recorded net loss after tax of USD0.8 million in 1Q17, versus a net profit after tax USD2.9 million in 1Q16.
Operating conditions of the regional container shipping industry are expected to remain challenging. The existing supply-demand imbalance remains a challenge for the industry. Competition in the market is thus expected to remain intense, further hampering industry recovery. Rising oil price will also have a significant impact on operating costs.
The tanker business is expected to remain stable; the Group is hopeful that the recent improvement in demand for dry bulk commodities will translate to a sustained improvement in charter rates for its bulk carriers.
The Group will continue to focus on improving operational efficiency and asset utilisation to mitigate industry challenges.