Yinson’s 1Q earnings slips 6.3% to RM46.7m

by ASILA JALIL/ pic by TMR FILE

THE uncertainty surrounding measures and time needed to fully contain the Covid-19 outbreak could have an adverse impact on Yinson Holdings Bhd’s workforce and financial position for its current financial year.

In its Bursa Malaysia’s filing yesterday, the floating production storage and off-loading (FPSO) vessel operator stated the coronavirus posed a significant threat to the global oil and gas industry which has led to the glut of oil supply and sudden drop in oil demand.

Yinson’s net profit slipped 6.3% year-on-year (YoY) to RM46.72 million in its first quarter ended April 30, 2020 (1QFY21) despite revenue jumped 64.5% YoY to RM343.75 million as the company benefitted from long term fixed price contracts with reputable oil companies.

Despite the increase in revenue, Yinson said it will continue to monitor and assess macro developments to enable pre-emptive and proactive measures that could be taken to mitigate the adverse impacts of the pandemic, when necessary.

Earnings per share stood at 4.27 sen in 1QFY21 versus 4.55 sen in the same period last year.

For the quarter, the group’s profit after tax decreased by RM15.74 million or 25.51% YoY to RM45.95 million due to higher depreciation and amortisation charges of RM18.79 million.

The fall in profit was also due to the absence of amortisation of unfavourable contracts of RM4.9 million, presence of impairment loss on property, plant and equipment of RM6.52 million and contract acquisition cost written off of RM34.85 million.

The quarter also saw a higher finance cost of RM48.49 million mainly resulting from one-off recycling of remaining deferred financing costs associated to the repaid loan upon completion of FPSO John Agyekum Kufuor’s refinancing exercise in April 2020.

The decrease was set-off by charter contributions from FPSO Helang, tankers and higher favourable foreign exchange movement of RM32.33 million, it said.

Following the measures taken to contain the spread of the virus in Malaysia, the group also activated its business continuity plan in a bid to minimise the disruption to its daily operation where the group leveraged on information technology and digital infrastructure to ensure smooth communication between employees.

“As a result, onshore based employees worked from home and were able to carry out their day-to-day tasks whilst offshore personnel underwent strict quarantine procedures before going offshore.

“In addition, the group put in place additional health screenings, distributed personal protective equipment and conducted awareness initiatives to minimise disruptions,” said the group.

It added the long-term fundamental outlook for the oil and gas industry will remain challenging with the emergence of new alternative energy sources and lower financial institutions’ risk appetite towards the sector.

The group is however confident it would stay resilient through the challenges with existing orderbooks and positive performance in operations to achieve satisfactory results for the financial year ending Jan 31, 2021.

“Amid the challenging global economic environment and the volatility of other currencies against the US dollar, the group shall strive to achieve satisfactory results for the FY21,” it said.