Yinson’s 2Q earnings hit by impairment, higher costs

by SULHI KHALID/ pic credit: www.yinson.com

YINSON Holdings Bhd’s net profit fell 44% year-on-year (YoY) to RM41 million in the second financial quarter ended July 31, 2019 (2QFY20), due to higher financial cost and impairment loss of RM4.86 million on property, plant and equipment.

The upstream oil and gas support service provider told Bursa yesterday its revenue dropped 13% YoY to RM213 million from May to July this year on the back of lower revenue reported in its offshore and marine segment.

Revenue from its offshore and marine segment for 2Q20 decreased by RM70.53 million to RM410.35 million compared to RM480.88 million in 2Q19.

Its other operation segment has returned to black by posting a profit of RM9.64 million compared to a loss of RM0.12 million in 2Q19.

On the group’s outlook, Yinson’s management is optimistic the upstream energy sector will replenish its production capacity with new floating production storage and offloading (FPSO) awards in the current financial year to counter the lagging investment effect from the past years.

“The long-term outlook in the oil and gas industry remains challenging with the emergence of new alternative energy resources and financial institutions risk appetite towards the sector.

“Amid the challenging global economic environment and the volatility of other currencies against the US dollar, the group will strive to achieve satisfactory results for FY20,” Yinson stated.

Last week, the group saw a charter contract worth US$1 billion (RM4.19 billion) over 15 years in Vietnam terminated due to disputes on overlapping claims in the South China Sea between Vietnam and China.

Additionally, Yinson stated it is currently in an advanced stage of discussion with certain lenders to acquire benefits and rights of Singapore-based loss-making offshore asset supplier Ezion Holdings Ltd (EHL) existing loans amounting to US$916 million.

“Upon completion of the debt conversion, Yinson Eden Pte Ltd, an indirect wholly owned subsidiary of the company will hold a minimum of 70% of EHL’s enlarged share capital,” it said.

The group has declared an interim dividend of four sen per share, amounting to RM43 million and to be paid on Dec 20, 2019.

Yinson’s share price closed one sen higher to RM6.70, valuing the shipping company at RM7.28 billion.