KUALA LUMPUR: Marine & General Bhd (M&G) has completed the debt restructuring of its upstream division involving RM925 million borrowings during its second quarter ended October 31 2020.
Following the completion, the company recognised a restructuring gain of RM106.8 million and considerably reduced its annual borrowing costs.
Hence, M&G is able to post a net profit of RM56.07 million in Q2 to reverse the RM12.15 million net loss a year ago.
The company, in a statement today, said the net profit recorded was also due mainly due lower finance costs, besides the restructuring gain.
M&G said its revenue in Q2 had decreased 13.3 per cent to RM47.57 million from RM58.84 million.
This was in line with the lower operating level during the current quarter, as the oil and gas (O&G) industry remained weak due to a shrinking in demand for oil due to the continuing Covid-19 pandemic and global oil supply glut.
"As a result, oil companies have scaled back their drilling activities which consequently affected the demand for offshore support vessel services operated by the upstream division. Declining demand for oil and its derivative products has also adversely affected the demand for tanker services operated by the downstream division of the group," it said.
For the six-month period, M&G registered a net profit of RM41.08 million from a net loss of RM20.58 million, while revenue shrank five per cent to RM102.85 million from RM108.35 million.
M&G executive chairman Datuk Mohd Azlan Hashim said in line with the declining demand for oil and its derivative products, the board expected the downstream division to record comparatively lower tanker utilisation rates in the current financial year.
He said in June, the group had taken delivery of a new chemical tanker, bringing its total fleet to seven tankers comprising four chemical tankers and three clean petroleum product tankers.
He said the additional tanker capacity was earlier planned in anticipation of potential business opportunities that would put M&G in good stead upon recovery of the industry.
"The gradual re-opening of businesses in the country as well as similar re-openings in our key trading partners such as China, Japan and Singapore, and the recent progress in Covid-19 vaccine development offer some hope of recovery for both divisions later next calendar year.
"Given this, the board remains cautious on the prospects for the current financial year amidst the continuing global economic uncertainty and its impact on the oil and gas industry. On a more longer-term basis, the board will strive to ensure both divisions remain competitive and is able to generate value for shareholders," he said.