OCEAN Vantage Holdings Bhd, a Sarawak-based provider of integrated support services for both upstream and downstream oil & gas (O&G) industry, has incurred a net loss of RM7.01 mil for its 3Q FY2024 ended Sept 30, 2024 (3Q FY2023: +RM5.05 mil) which was largely attributable to cost escalations and project-specific challenges.
This was particularly in relation to “the nearing completion” of the group’s Bintulu Additional Gas Sales Facility 2 (BAGSF 2) project.
“The challenges we faced in 3Q FY2024 are specific to the complexities of executing the BAGSF 2 project which posed unique cost and timeline pressures,” commented Ocean Vantage’s managing director Kenny Ronald Ngalin.
“We are undertaking a comprehensive review of our operations to identify and address the root causes of these issues. However, we anticipate a continued period of difficulty as we navigate this challenging environment.”
The group’s revenue for 3Q FY2024 also fell 50.06% to RM19.67 mil (3Q FY2023: RM39.38 mil) also in view of the nearing completion of the BAGSF 2 project which significantly reduced contributions from its engineering, procurement and construction (EPC) and project management segment.
Reflecting similar challenges, the group’s financial performance for 9M FY2024 period posted a net loss of RM9.06 mil which is a sharp decline from RM12.41 mil recorded in the same period of last year.
Escalating costs in the BAGSF 2 project were driven by rising material and manpower expenses. These factors impacted the group’s ability to maintain profitability and manage cost overruns effectively.
As a result, the group’s gross profit margin for 9M FY2024 fell to 2.90%, down from 18.14% in the corresponding period of last year.
On the same note, revenue for 9M FY2024 edged down 35.80% year-on-year (yoy) to RM87.05 mil (9M FY2023:RM135.60 mil).
Historically a key revenue driver, the EPC and project management segment reported a 69.27% yoy decline in revenue due to delays and reduced project scope in key contracts.
Liquidity and cash flow challenges further weighed on the group’s performance with net cash used in operating activities for the nine-month period stood at RM330,000 in stark contrast to the RM8.93 mil generated during the same period last year.
Total liabilities remained high at RM48.33 mil, further straining the group’s financial position.
Looking ahead, the group remains cautious about its outlook for the remainder of 2024.
“Although we face significant challenges in maintaining operational efficiency and stabilising revenue streams, we believe that our proactive approach will position us for recovery and growth in the long term,” projected Ngalin.
At 2.37pm, Ocean Vantage was down 0.5 sen or 3.45% to 14 sen with 4.48 million shares traded, thus valuing the company at RM59 mil. – Nov 27, 2024
