Penguin posts 53.2% drop in H1 earnings amid Covid-19, weak oil prices

THE net profit of Penguin International, which builds high-speed aluminium craft, plunged 53.2 per cent to S$3.9 million for the six months ended June, hit by the double whammy of the Covid-19 pandemic and weak oil prices.

The mainboard-listed company's H1 revenue fell 26.1 per cent to S$50.1 million. Revenue from shipbuilding, ship repair and maintenance was down 28.8 per cent to S$39.2 million, due mainly to fewer stock vessels sold. Income from the chartering segment fell 15 per cent to S$10.9 million, given a decrease in chartering activities. Gross profit correspondingly fell 32.9 per cent to S$12.6 million.

The topline shrinkage was softened by a 61.8 per cent rise in other operating income to S$5.8 million, arising from the sale of more vessels from the Penguin's operating fleet, as well as S$1.7 million in Covid-19 business-support schemes from the Singapore government.

Net operating cash outflows for H1 stood at S$9.4 million, used mainly for shipbuilding. The company had generated net operating cash inflows of S$12.5 million in the same period last year.

In H1, Penguin built six new vessels, of which three were for stock and chartering, and the remainder, built to order.

But operating conditions remain tough. Penguin noted that demand for new vessels in H1 had weakened, while crewboat charter rates and utilisation rates fell. While none of its clients have terminated any shipbuilding contract, some vessel deliveries have been delayed by mutual agreement.

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The lockdown of foreign workers' dormitories in Singapore also affected in-house and subcontracted labour, delaying internal newbuilding projects for its chartering fleet. As at Thursday, all of Penguin's in-house foreign workers were back to work, but most of its subcontracted foreign workers were still under lockdown.

To conserve cash, Penguin has now halted or slowed down some of its uncommitted build-for-stock vessels. All committed build-for-stock and build-to-order vessels are still being completed as scheduled.

Penguin has also obtained and drawn down on a S$5 million unsecured term loan under Enterprise Singapore's Temporary Bridging Loan Programme.

The company said: "Notwithstanding the challenges, the group is still working hard to secure new build-to-order projects across various market segments, as it expands its geographical reach. The Batam shipyard is currently building various types of vessels for ship owners from South-east Asia, Australia, North Asia, Africa and Europe."  

Shares of Penguin closed flat at S$0.44 on Thursday.