Investor Relations - News
Press Release - MTQ Posts 1st Quarter Earnings Of $563, 000
SINGAPORE - 30 JULY 2003 - Mainboard-listed engineering group MTQ Corporation Limited today announced a 1st quarter net profit of $563,000 on a turnover of $12,017,000 for the financial year ending 31 March 2004.
This compares against a 1st quarter result of $3,276,000 in the last financial year, which benefited from a net exceptional gain of $2,799,000 arising from the sale of the Group's marine repair services division offset by a provision for an investment. Before the net exceptional gain and taxation, the Group's 1QFY2004 results represent an improvement of 20% above its previous year comparative.
The improvement was underpinned by turnover growth across its key operating divisions, strong exchange gains in the Australian dollar and Sterling pound as well as the absence of losses from the marine repair services division.
Nourished by a healthy Australian economy, the Engine Systems division kept up its healthy performance in the quarter, with additional contribution from the newly acquired fuel injection business adding to its coffers. The Oilfield Engineering division also registered an improvement despite intensifying competition in the oil and gas repairs sector as efforts to secure stronger alliances with the OEMs and drilling contractors translate into high work volumes.
Fleet utilization rate for the Subsea Robotics division staged a gradual recovery in first quarter, albeit customers are becoming more cost sensitive amidst a persistently soft market in the North Sea waters since 3QFY2003. The division's initial efforts to penetrate into the Asian market, at the expense of its job margins, also constrained the overall performance of the division.
"Following the strong performance in FY2003, the Group will be looking to further strengthen and expand its key operations this year under the MTQ identity," said Mr K.K. Kuah, Chairman and CEO of MTQ.
"In particular, the Group is well in progress with the incorporation of an operating arm in Surabaya, Indonesia, to tap the potential of the turbocharger industry in this region. The new unit is expected to commence operations by 3QFY2004. Coming quarters will also see the Engine Systems division engage in active pursuit to accelerate the growth of its fuel injection business."
Riding on strong capital expenditure projections in the oil & gas industry in South East Asia, the Oilfield Engineering division is expected to deliver healthy earnings in the coming quarters. Its upgraded and enlarged engineering capacity will also allow the division to capture and support heavier repair works from the OEMs and drilling contractors. Nevertheless, intensive competition in the regional oil and gas equipment repair sector is unlikely to ease in the short term and will continue to exert a downward pressure on job margins.
Recovery in the ROV fleet utilization is expected to continue well into 2nd quarter with the advent of the summer season, before winter sets in by late 3rd quarter. Recognising the operational and weather constraints in the North Sea, the Group will continue to focus on strengthening its presence in the Asian market.
The general operating environment of the Group's core activities is likely to remain tepid amidst the uncertainties clouding over the global economies. Any moderation of the Australian economy could also have an adverse influence on the performance of the Australia unit. Nevertheless, the Group will continue to strengthen its operations through progressive diversification of its individual operations both in terms of product/service range and the customer base as well as on-going monitoring of its operating costs.
MTQ Corporation Limited Group specialises in engineering services, and is primarily involved in oilfield equipment repairs as well as the design, production and operation of subsea remotely operated vehicles. The Group also owns the leading independent turbocharger supplier and repairer as well as one of the largest suppliers of fuel injection spare parts in Australia.