As profits soar, TWC looks to expand service contracts
11 February 2009Tiong Woon has announced half year results to 31 December 2008, showing net profits for the group up 119% to SGD23.1m (USD15.3m) from SGD10.6m (USD7m) in the first six months of its 2007/08 year. The group said that it will increase its on ship repair, in order to maximise the return on its investment at its Bintan fabrication yard.
Tiong Woon Corporation (TWC) reported turnover for the six months to 31 December 2008 of SGD95.51m, up from SGD65.82m a year earlier. Turnover grew by 45%, outstripping the growth of TWC's cost of sales, which rose 32% to SGD54.45m, from SGD41.31m.
The biggest contribution to turnover came from the company's heavy lift and haulage segment. It delivered turnover of SGD64.42m in the first half of 2008/09, up 46% to SGD44.17m in 2007/08.
The company's first fabrication contract is a 146m derrick pipelay barge being built for Norce Offshore. The contract is worth SGD64.8m in total; accrued revenue for the project stood at SGD31.5m on 31 December 2008, up SGD13m from SGD18.5m booked on 31 July. Income recognised from the contract over the six months pushed turnover from the fabrication yard to SGD15.2m, up 67% from SGD9.1m in 2007/08.
However, the yard still made a loss of SGD2.6m (down 6% from SGD2.77m) as the cost of general overheads increased. The company increased its borrowing by SGD21.4m to SGD140.9m, largely in the form of new revolving credits used to finance the barge fabrication.
TWC said, “In light of the current global financial downturn and to maximise the yard investment, the group will focus on providing ship repair services, as these projects are shorter in duration, require lower working capital outlay and have better profit margins.”
While the company's heavy lift and haulage, and fabrication, segments developed fast, it continued to make disposals in its marine transportation segment. Turnover fell 7% to SGD6.9m; pre-tax profit in the division rose 10% year-on-year, to SGD3.2m, as a result of the SGD1.6m sale of its smaller tugs and barges.
Chairman and managing director Ang Kah Hong said, “Despite current economic and market challenges, we have a strong team at the helm and a pool of professional and service-orientated staff members. Our financials are sturdy and, coupled with a wide range of products and services, we remain positive about TWC’s future and our ability to navigate through this slowdown.
“Going forward, the group will continue to build on its strengths. Lifting and haulage will be its main driver of growth and we will also actively expand our geographical footprint. We will also look to growing our distributorship and agency services in markets such as Asia and the Middle East. At our Bintan Yard, we shall focus on ship repair and fabrication. At the same time, we will also strive for greater efficiency in managing our costs at all levels.”
