Investor Relations - News
Press Release - MTQ Third-Quarter Earnings Declined As Subsea Robotics Restructures / Share Of Associate Profit Cushions Negative Impact
SINGAPORE - 29 JANUARY 2004 - Mainboard-listed engineering group MTQ Corporation Limited today reported a third-quarter profit of S$0.3m for the financial year ending 31 March 2004 - a 61% decline from that achieved for the prior comparative quarter. Year-to-date, the group achieved a profit of S$1.3m.
The current quarter saw the Group significantly affected by losses sustained at its Subsea Robotics division. Lower ROV fleet utilisation was experienced this quarter during which the division commenced the relocation of its North Sea fleet as part of the strategy to exit the North Sea market.
Despite the inherent market difficulties, the division's ROV fleet had demonstrated excellent operational capability during its operations in the North Sea region, an indication of the superiority of the fleet's technical design. With the division now in the restructuring phase whereby focus is on the prospective Asian and Middle Eastern markets, the Group had provided a one-off charge of S$0.3m for the fleet relocation and redundancy payments.
As for the outstanding insurance claim arising from the loss of the "PHOENIX 2" ROV, the Division will be proceeding with legal action against the insurers, following unsuccessful attempts at settlement. The Division believes that the claim has reasonable prospects for success.
The Oilfield Engineering division also experienced pressure on both its revenue and job margins due to the unexpected slowdown in the oilfield repair segment. Mr K.K. Kuah, Chairman & CEO of MTQ Group, had this to comment:
"While the oilfield repair sector is likely to remain in the cyclical downturn in the immediate near future, we are not deterred. We are casting our marketing net wider across Asia and beyond, anticipating an imminent recovery in the new financial year."
Meanwhile, results of Engine Systems division lent a positive note to the Group's overall performance as it enjoyed maiden contributions from the recently acquired fuel injection business of Adelaide Fuel Injection group ("AFI"). The Group also expects sustained contributions from the division through to the end of the financial year.
AFI is one of the leading parts distributors and service agents in Australia's fuel injection business. The acquisition of AFI forms part of the Engine Systems division's strategy to achieve vertical integration of its fuel injection operations given AFI's fuel injection servicing function. The acquisition is expected to reap substantial synergistic benefits, and enlarge the division's earnings base by tapping onto the division's nationwide customer-supplier network and well-established business infrastructure.
During the quarter, MTQ also reaped positive returns on its investment in its listed associate, RCR Tomlinson Limited. The Group took up its share of RCR's half-year results which amounted to S$0.5m, and recognized negative goodwill of S$0.3m arising from the acquisition of shares in RCR. RCR will continue to feature as one of the major contributor to the Group in the year ahead.
Strong exchange gains had also helped in the Group's third-quarter earnings.
Barring unforeseen circumstances and a successful resolution of its claim against the insurer, the Group expects to remain profitable for the full financial year.
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 supplier of turbocharger and fuel injection parts and services in Australia.