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The Group posted a 7.2% increase in revenue to USD91.6 million for the first financial quarter ended 31 March 2018 ("1Q18"), from USD85.4 million in the previous corresponding quarter ("1Q17"). This was primarily driven by an increase in revenue contribution from its container shipping business segment.
Container volume handled in 1Q18 rose 10.9% to 316,000 TEUs. This helped to lift revenue generated from the container shipping segment by 7.8% to USD83.4 million, compared to USD77.4 million in 1Q17.
Revenue from the bulk & tanker business fell 14.6% to USD5.9 million in 1Q18, from USD6.9 million in 1Q17, as the Group operated a smaller tanker fleet year-on-year. The decrease was partially mitigated by improvements in the employment days and charter rates of its bulk carriers.
In conjunction with the adoption of SFRS(I) 15 as explained in paragraph 5, the gross profit margin was affected due to the reclassification of stevedoring cost recovery from cost of sales to revenue.
The Group's cost of services rose 8.1% to USD89.1 million in 1Q18, from USD82.4 million in 1Q17, mainly driven by higher costs in the container shipping segment. The increase took into account higher stevedoring from larger container volume handled, and higher bunker price. This was partially offset by lower cost of services incurred by the bulk & tanker segment in view of a smaller operating fleet year-on-year.
On account of the above, gross profit narrowed to USD2.5 million in 1Q18, compared to USD3.0 million in 1Q17.
Other operating income rose 56.2% to USD0.8 million, from USD0.5 million a year ago. This was due to gain on disposal of a vessel during the period.
The Group recorded a net profit after tax of USD0.27 million, compared to USD0.28 million in 1Q17.
In conjunction with the SFRS(I) 1 as explained in paragraph 5, the Group has adjusted the translation reserve and revalued property, plant and equipment based on fair values as at 1 January 2017, and recognised these as deemed cost.
In line with the above, the Group's translation reserve balance as at 1 January 2017 is reset to zero. Property, plant and equipment as at 1 January 2017 were also adjusted from USD242.9 million to USD175.6 million, while retained earnings were consequently adjusted from USD187.0 million to USD107.0 million.
Amounts due from immediate holding company increased as a result of an increase in business activity performed through the immediate holding company acting as the Company's agent in Indonesia.
Following the disposal of a tanker, as announced on 4 April 2018, the Group no longer have any asset held for sale as at 31 March 2018.
Outlook for the container shipping business segment is expected to be challenging. While the sector saw some improvement in operation conditions in the past 12 months, the recovery is hampered by intense competition for cargo volume following the bout of consolidation among mainline operators, along with rising bunker costs.
The recent improvement in the demand for dry-bulk commodities is expected to lift the dry-bulk sector. The Group is looking to devote more resources into this segment to grow the business. Nevertheless, the Group will continue to cautiously monitor market developments.
The Group will continue to work on growing its logistics support capabilities in the region. Specifically, it will keep an active look out for opportunities to expand its warehousing and container depot services.
The Group remains focus on optimising asset utilisation and operational efficiency in its vessel management.