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The Group's performance for the current quarter under review compared to 3Q 2015 is as follow:
For the quarter ended 30 September 2016, the Group recorded revenue of RM13.9 million, 70% lower than corresponding quarter of the previous year.
Shipbuilding division recorded revenue of RM0.3 million for 3Q 2016 while the revenue of 3Q 2015 amounted to RM17.6 million included the sale of one offshore support vessel.
Ship Charter Division
Revenue of ship charter division decreased by RM15.1 million or 53% compared to 3Q 2015. The unfavourable variance was mainly due to more vessels on short term contracts were off-hired during the quarter under review.
Despite drop in utilization rate of vessels, the Group recorded lower loss before tax of RM7.8 million compared to loss before tax of RM11.2 million in 3Q 2015. The adverse result in 3Q 2015 was mainly due to impairment charge on inventories and assets and share of losses in joint venture companies.
The industry is continually facing immense challenges due to the reduced oil and gas activities globally and these slowdown had resulted in severe oversupply of offshore support vessels. With the current surplus of offshore support vessels, the Group is very selective in the type of vessels to be built. Main emphasis is currently on enhancing its docking (ship repair) facility. The Group is committed towards optimising the utilization of the Group's vessels. The charter rates are expected to weaken in the midst of oversupply of vessels for the next six months if there are no major new oil and gas activities. If this current oversupply and slowdown persists over the medium term, the impairment of assets may be required. With the ongoing initiatives in rationalizing and optimizing costs and exposures, we believe the Group will be poised and well positioned to tide over the prevailing business challenges.
Barring any unforeseen circumstances or events, we anticipate that the remaining 2016 will continue to be a challenging year where charter rates will likely be flat or weaken, with shipbuilding activities curtailed since crude oil prices are not expected to be northbound from the current levels in the short term.