KUCHING: Sealink International Bhd has lost more money as its group net loss widened to RM65.8 million in financial year ended Dec 31, 2021 (FY2021) from RM40.8 million in FY2020 due to impairment on aged vessels and inventories as well as trade receivables.
Year-on-year, group revenue dipped to RM37.8 million from RM49.9 million in FY2020. Losses per share worsened to 13.16 sen from 8.16 sen.
The bulk of the losses for FY2021 was recorded in fourth quarter, amounting to RM40.5 million on revenue of RM9.1 million as compared to losses of RM16.2 million on turnover of RM6.2 million in Q42020.
In Q42021, Sealink said its higher operating loss of RM44.6 million was due mainly to impairment of RM21 million on aged vessels, RM7.5 million on trade receivables and RM5 million on aged inventories.
For its vessel chartering division, the Miri-based shipping company said its revenue rose to RM8.95 million in Q42021 from RM5.24 million in Q42020 due to higher vessel utilisation at 41 per cent.
However, the shipbuilding division saw its revenue plunged to RM107,000 from RM923,000 as its ship repair activities were mainly servicing the group’s own vessels.
Commenting on prospects going forward, Sealink said despite the loss suffered by the group last year, there is a surplus in the cash flow generated from operations amounting to RM29 million.
“The group’s total term loans were reduced from RM44 million in December 2020 to RM28 million in December 2021, a drop of about 57 per cent. Presently, only one vessel is encumbered. This speaks well of the viability of the group’s business despite the challenging conditions in which it operates.
“At the same time, with reduced gearing, the group will have a stronger balance sheet to take on additional financing to fund expansion when the industry turns around.”
Sealink said research analysts were of the view that rising global oil prices amidst increasing COVID-19 vaccination rates and anticipated higher world economic growth rates in 2022 are brightening the outlook for Malaysia’s oil and gas industry.
“As vaccination rates rise, the COVID-19 pandemic is expected to be better managed and economic activities and mobility will firmly return to pre-COVID 19 levels. Steady economic developments are expected to support the partially delayed recovery in oil demand in various sectors.
“The US Energy Information Administration’s (EIA) projected crude oil price is expected to average US$90 per barrel in February 2022 and nearly US$88 per barrel for first half of this year,” it added.
Sealink said the group will continue its emphasis on its core activities of shipbuilding, ship charter and ship repair.
“The group’s shipbuilding division will be looking towards building vessels which have a niche market as well as enhancing its docking (ship repair) facilities, whilst continuous efforts will be undertaken towards optimising capacity utilisation of the group’s vessels.
“The group is also looking at building new vessels that are more energy efficient and environmental friendly in line with tighter environmental regulations in the maritime industry. With the on-going initiatives in sustainable cost rationalisation and exposures, we believe the group is well positioned to tide over the current business challenges.
“Presently the group is looking at opportunities to diversify into sustainable investments as part of our responsible investment initiative. We have to be prepared for a drop in fossil fuel demand as consumer preference changes for cleaner and renewable energy.”
Sealink said while the group remains vigilant on the market outlook, “we will continue to capitalise on our capabilities and reputation in vessel chartering business. Long term sustainability of the business has been our key priority.”
