Sealink International has reported a more than eight-fold increase in losses for the second quarter of 2019.
The Malaysian offshore player lost MYR 9.7m ($1.8m) against the loss of just MYR 1.1m seen 12 months earlier.
It was hurt by a 7% year-on-year decline in revenue to MYR 11.9m and a substantial reduction in income from an associate company.
“Despite the slight decrease in revenue in the second quarter, the group is spending more on activation of vessels to make them available, fit and proper for upcoming charters in anticipation of revenue growth in the second half of the year,” Sealink said.
It added that the loss for the period under review was mainly due to the activation of vessels thus resulting in margin deterioration.
“On a positive note, the net cash flow from operating activities has improved substantially despite the high activation cost,” it added.
Sealink said that while revenue saw a year-on-year decline, revenue was up 70% on the preceding quarter showing the “improvement in utilization”.
Looking ahead, Sealink said that although market sentiments are still cautious, there is “more optimism” over prospects for the oil and gas industry on the back of stable oil prices, prompting greater levels of activity.
“Petronas’ activity outlook for 2019-2021 portrays growth in brownfield activities particularly in the rigs category and its supporting services, marine vessels,” Sealink said.
“Base activities in maintenance are projected to increase for both onshore and offshore in tandem with this outlook.
“According to the research arm of Kenanga Investment Bank, contract flow started to show signs of a gradual pick-up for the past three to four quarters.”
Research is also said to indicate that the upward revision in most upstream sub-segments’ activities could be due to the delayed work orders last year being pushed to 2019, which may potentially lead to better contract flows and further provide order-book replenishment opportunities for the support sectors, according to Sealink.
