Investor Relations - News
Press Release - MTQ Reports 2nd Quarter Earnings Of $395, 000 Announces Interim Dividend Of 4% Less Tax
SINGAPORE - 31 OCTOBER 2003 - Mainboard-listed engineering group MTQ Corporation Limited today announced a 2nd quarter net profit of $395,000 on a turnover of $12,288,000 for the financial year ending 31 March 2004. This brings the Group's interim earnings at half year to $958,000 on a turnover of $24,305,000.
Compared with the 2nd quarter of the prior financial year, performance in the current quarter was weaker. This was mainly attributable to losses suffered by the Subsea Robotics division as a result of stagnant demand for subsea support services in the North Sea. Unfavourable currency exchange also affected the Group's bottom line.
A decision had since been taken by the Group to shift the subsea robotics operations away from the North Sea and to focus on the Asian and Middle Eastern markets instead.
"We had succeeded in demonstrating the superior engineering capability of our ROV fleet under the demanding working conditions in the North Sea. Nevertheless, in view of the increasing maturity of the North Sea market coupled with its inclement weather and short working seasons, we have decided to pull out from Aberdeen and direct more marketing focus on Asia and Middle East.", commented Group Chairman and CEO, Mr K.K. Kuah.
"Subsea robotics is a highly capital-intensive business, and we have to make sure our fleet is positioned in the right market, at the right time, to maximise fleet utilisation rate." added Mr Kuah.
Meanwhile, increased market competition coupled with the more cautious spending on equipment repairs by drilling contractors and rig owners may impact on the second-half performance of the Oilfield Engineering division. Besides seeking to broaden its market coverage beyond its traditional marketplaces, the division will also spare no efforts in exploring ways to enhance its productivity.
The Engine Systems division posted stronger earnings in the current quarter with its expanded earnings base in the turbocharger and fuel injection operations. It continues to enjoy attractive trade margins given its firm market leadership and the buoyant domestic economy in Australia. Besides fresh income stream from the Adelaide Fuel Injection business acquired in October 2003, further growth in the existing businesses is also expected.
Commencement of the newly incorporated operations in Surabaya, Indonesia, is also expected to reinforce the division's earnings in the long run after coverage of initial start-up costs.
Notwithstanding the initial difficulties encountered in our Subsea Robotics division, the Group remains confident in the division's long-term potential. Going forward, the Group will continue to focus on its existing core business as well as actively seeking expansion opportunities to broaden its earnings base.
Future earnings are expected to be boosted by the Group's share of profit of its associated company, RCR Tomlinson Ltd ("RCR"). RCR, a company listed on the Australian Stock Exchange Limited, is a leader in Western Australia in multi-disciplined engineering, primarily in the provision of mechanical repair and maintenance services; fabrication, installation and servicing of boilers; site maintenance and construction; and manufacture of equipment using its own intellectual property.
Barring unforeseen circumstances, the Group will remain profitable for the full year.
The Directors have declared an interim dividend of 4% less tax to be paid in respect of the current financial year. The Company is also proposing to implement a scrip dividend scheme, subject to shareholders' approval.
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.