KUALA LUMPUR (Oct 25): TAS Offshore Bhd is in the red after making a loss of RM1.13 million in its first quarter of the financial year 2017, ended Aug 3, 2016. Compared with the corresponding quarter of the preceding year, its net profit stood at RM8.73 million.

In its filing to Bursa Malaysia today, it said losses were mainly due to price adjustments made for vessels sold and impairment losses on other receivables.

Revenue for 1QFY17 too tumbled as much as 97% to RM2.25 million, versus 1QFY16’s revenue of RM75.5 million.

“The negative revenue recorded in the preceding quarter was due to price adjustment for vessel sold,” the group said. However, on a quarter-on-quarter basis, the revenue was a turnover from the loss made in 4QFY16, totalling RM6.49 million.

It was reported earlier that TAS Offshore’s subsidiary, TA Ventures, is in a dispute over the termination of a shipbuilding contract with another subcontractor, owing to late delivery by the latter.

The other shipbuilder rejected the cancellation and has yet to refund RM12.33 million of progress payments, forcing TAS Offshore to impair the amount in its accounts.

The group also made the move to terminate three sales and purchase agreements due to late delivery, but eventually reached an agreement with the purchaser to deliver one vessel and cancel the other two.

On a more positive note, TAS Offshore secured two contracts last month to sell two harbour tug vessels for about RM31.6 million.

Commenting on the group’s outlook moving forward, TAS Offshore said in the long-term, the oil price is expected to recover, due to increase in demand for energy, when “industrial and development activities increase in tandem with the population growth and thus, the demand for offshore support vessels to return.”

“The decision by OPEC to reduce the production of oil in their September meeting had helped to push the oil price to about US$50 (RM207.7) per barrel. With Iran's current oil production almost reaching the pre-sanctions level, any decision made by them in sync with OPEC's decision, will help to further stabilise the current oil price,” it said.

“However, the global economy remains weak and the recent increase in the number of oil rigs being redeployed in the USA in response to the movement in oil price, may put a dent to the sustainability of the upward movement of oil price in the short term,” it added.

No dividend was paid to its shareholders in the current quarter and financial period to-date.

At Bursa Malaysia, TAS Offshore’s share price dipped 1.5% to close at 32.5 sen, with a market value of RM57.07 million.