SILK: MARINE LOGISTICS OPS A LIFE BUOY
Transportation of liquid bulk cargo set to cushion impact on upstream business
SILK Holdings Bhd will be banking on its downstream marine logistics business to cushion the impact on upstream tanker business.
Executive chairman Datuk Mohd Azlan Hashim said the move was made to ensure the company continued to remain sustainable despite the softer oil prices.
“With utilisation rates plunging gradually to 50 per cent currently, from 80 per cent previously, we need to be on the conservative side and maintain a prudent spending and cost management.
“In the middle of last year, we embarked into the downstream business involving transportation of liquid bulk cargo that would cushion the impact on our upstream business.
“The three tankers that we have are all fully charted out, meaning it stands at 100 per cent utilisation rate. We will not buy more tankers, but will look at the market needs and demands instead,” he said after the annual and extraordinary general meetings, here, yesterday.
The company owns 21 vessels for its upstream business, of which only 50 per cent is utilised at the current crude oil price levels.
On earnings, the first quarter ended March 31 saw its net loss widening to RM16.07 million, or 2.29 sen loss per share, from RM7.7 million, or 1.1 sen loss per share, a year ago.
The losses were mainly due to declining performance of its marine logistics (upstream) division, while its downstream revenue has not managed to make profit as yet.
Silk’s toll concession asset is being sold to Permodalan Nasional Bhd (PNB) for RM380 million in cash, with a net gain of RM365.32 million for the company.
It entered into a conditional share purchase agreement with PNB for the disposal of 100 per cent of the issued and paid-up share capital of Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd (SILK) for RM380 million.
From the proceeds, RM70 million would be utilised to pay dividend to its shareholders, RM200 million to expand its oil and gas
business and RM95 million as working capital for the company.
Silk is the concession holder of the 37km Kajang Traffic Dispersal Ring Road (Silk Highway) under the concession agreement executed in October 1997 to finance, design, construct, operate, and maintain the highway for 36 years.
The company’s name will also be changed from Silk Holdings Bhd to Marine & General Bhd, signalling that it would open up its company to new businesses after the sale of its highway business.