KUALA LUMPUR (Aug 13): Keyfield International Bhd (KL:KEYFIELD), which reported a steep 65.2% drop in its second-quarter net profit, expects its earnings to improve in the coming quarters, supported by higher vessel utilisation.

Its chief financial officer Eugene Kang said all of the group’s vessels, except the newly acquired Keyfield Joyful, are currently on hire, putting the group in a stronger position for the second half of 2026.

“As of today, all vessels — except our newly acquired Keyfield Joyful — are already on hire. So we are looking at even better figures for the second half of 2026,” he said during a briefing on the group's latest results Thursday (Aug 13).

The group's net profit for the second quarter ended June 30, 2026 (2QFY2026) fell to RM23.1 million from RM66.36 million a year earlier, as revenue declined 14% to RM113.5 million from RM132 million. The lower earnings were also due to the absence of disposal gain, as the previous year's corresponding quarter recorded a gain of RM25.7 million from the sale of Keyfield Lestari.

The group's net profit for the first half of FY2026 (1HFY2026) came to RM79.22 million, down 9% from RM87.04 million a year earlier, as revenue dropped 26.5% to RM160.7 million from RM218.7 million.

Timing factors weighed on the group's financial performance in the first half of this year, the group said in its results filing on Thursday.

“In Malaysia, we saw delays in the commencement of local charters due to customer vessel scheduling requirements. Following the abating of adverse weather conditions in the South China Sea, all of our vessels deployed in this region, with the exception of our newest vessel, Keyfield Joyful, have since commenced their chartering contracts as of the date of this announcement. We took delivery of Keyfield Joyful in July and expect its chartering contract to commence in the third quarter of 2026.

“On the international front, two of our vessels were deployed to the Middle East for the first time in 2026. This required a certain amount of time for sailing, pre-hire preparatory works and inspections. Furthermore, the Middle East conflict temporarily delayed the commencement of the charter of one of these vessels,” the group added.

Nevertheless, Keyfield said its own-vessel utilisation rate improved sharply to 69% in the second quarter this year from 36.1% in the first quarter this year, with chartered days nearly doubling to 879 from 442, as more vessels commenced their charters after the monsoon season.

Still, utilisation remained below the 74.6% recorded in the second quarter last year (912 chartered days), due to chartering delays this year.

Kang expects vessel utilisation rate to reach about 90% to 95% in the third quarter, before easing to around 60% to 65% in the fourth quarter, based on current contract execution timeline.

He added that the impact of higher oil prices is expected to take three to nine months to feed through to offshore activity. “The delayed impact will probably take three, six, [or] nine months. This will translate into better or increased oil and gas activity in the second half of the year and hopefully into 2027 and 2028."

Kang expects gross profit margin, which dropped to about 11.1% in the first half of FY2026 — compared to about 46% in the corresponding first half of FY2025 — to rebound to 30%-40% in the second half of FY2026.

He attributed the margin compression to higher fuel costs across its fleet, increased war allowances for crew on vessels operating in the Middle East and lower accommodation workboat charter rates.

The “silver lining” was rising rates for anchor handling tug supply (AHTS) vessels, which Keyfield had added more of to its fleet to cater to stronger demand.

Together with its latest earnings report, Keyfield declared a second interim dividend of 1.5 sen per share, payable on Sept 21, bringing its year-to-date payout to 4.5 sen per share, up from four sen in the first half of FY2025.

Keyfield shares dipped three sen to close at RM1.37 on Thursday, valuing the group at RM1.11 billion. Year to date, the stock is down 16 sen.