KUCHING: Dayang Enterprise Holdings Bhd (Dayang), a leading oil & gas player, has recorded a sharp increase in gross margin and improved vessel utilisation rate.
According to managing director Tengku Datuk Yusof Tengku Ahmad Shahruddin, the group’s gross margin has shown a vast improvement to 41 percent last year from 31 percent in 2017.
“This clearly demonstrates the economies of scale of our operations within Dayang group,” he said.
For financial year ended Dec 31,2018 (FY2018),he said Dayang group revenue soared by 35 percent to a record high of RM938 million from RM695 million in FY2017,reflecting the robust work orders from its key customers as well as higher vessel utilisation rate.
Year-on-year, Tengku Yusof said Dayang posted group net profit of RM160 million, a reversal from loss of RM145 million.
“What makes the strong financial results more remarkable is the fact that we achieved the stellar performance under an environment of a relatively more subdued oil price.
“Also,t his has taken into account the losses at Perdana Petroleum (Dayang’s subsidiary) which recorded a net loss attributed to the shareholders of RM41 million, underlying the solid financial performance from Dayang’s core operating unit,” he said when reviewing the group’s yearly performance in Dayang 2018 annual report.
Tengku Yusof said a major milestone Dayang achieved in 2018 was the multiple Pan MCM (Maintenance,Construction and modifications) contracts it secured from several production sharing contractors in Malaysia, including Murphy Oil,Nippon Oil and Roc Oil.
“The five-year MCM jobs estimated at RM1.5-2 billion, clearly illustrated the strong confidence that the customers have on our execution capability and also our competitive edge,” he added.
Outside Malaysia, Dayang, together with its local partner in Turkmenistan Gujurly Inzener, and via a joint-venture company, were awarded a contract for the provision of facilities’ maintenance support for Petronas Carigali (Turkmenistan) Sdn Bhd.
The contract, effective from Jan 1,2019 to 2020,with an option to extend for another year, is estimated to worth US$100 million.
“Our business operations in 2018 witnessed a steady improvement throughout the year as business activities picked up substantially in the second half of 2018 as the works orders from Maintenance, Construction and Modification contract and Pan Hook-up and commissioning contract (Pan HUC) came in.
“After the slow start during the first quarter of 2018 as inclement weather slowed down work progress, resulting in low vessel utilisation, we experienced a more robust work flow in the remaining of 2018.
“Vessel utilisation of Perdana Petroleum improved from a low of 27% in the first quarter of 2018 to 73% in the fourth quarter of 2018.On a full-year basis, vessel utilisation was stronger at 64% as compared to 52% in 2017,” said Tengku Yusof.
Perdana Petroleum has a fleet of 16 vessels, including accommodation work barges,anchor handling tug supply vessels and workboats.
Tengku Yusof said the synergistic tie-up with Perdana Petroleum had ensured Dayang with access to adequate and reliable vessel supply to position itself to take on engineering and construction projects as their combined expertise would further enhance Dayang’s competitive advantage.
This, he added, could also help to set the platform for Dayang’s future strategic venture into engineering projects, offering integrated offshore services to its clients.
“Based on the current work orders received from the oil majors and the work planning activity programs that are on hand currently, we envisage 2019 to be another good year for us to showcase the much-anticipated synergies between Dayang and Perdana Petroleum,”
said Tengku Yusof.
He said Dayang has call-out contracts estimated at RM3 billion which is expected to last until 2023.
“In addition, we are awaiting the results of some tenders for contracts with oil majors that are still under evaluation.
“We are hopeful of a favourable outcome for the tenders as Dayang could leverage on its strong outstanding track record to offer value-added services to its customers,” he added.
Dayang executive chairman Datuk Hasmi Hasnan said the group had made a remarkable turnround in 2018 after going through the turbulence and turmoil over the past few years.
He said after enduring the most challenging period in its history in 2017,the company had bounced back with more vigour and strength in 2018 with not only much improved earnings by the highest-ever group revenue.
This, he pointed out, is in sharp contrast to Dayang’s competitors in the oil and gas industry as a number of established players continued to be mired in financial difficulties.
“Well, how did we do it ? It was truly ‘Dayang at its Best’ and it was truly ‘teamwork at its Finest,’ “ said Hasmi in his statement in the annual report.
He said the group’s dedicated efforts over the past few years to streamline its business operation via various cost optimisation measures, coupled with the ramp-up of business activities in second half-2018,had finally reaped the desired outcome as proven by the outstanding financial results.
Hasmi said Dayang’s strong order book of RM3 billion would provide strong earnings visibility over the new three years.
