Higher costs reduce Eversendai's profits
Contractor says intricate Middle East projects also require investment
Steel construction specialist Eversendai has announced a 60% fall in profits for the second quarter of 2014, which it blamed on increased business development costs as well as "a number of intricate fabrication projects" in the Middle East and India.
The Malaysia-headquartered firm recorded a net profit of $2.2mn (Q2 2013: $5.3mn) based on sales of $70.6mn ($78.5mn).
The company is currently building a fabrication yard in Ras Al Khaimah which it is planning to use as a base for its oil & gas business, Eversendai Offshore.
The Middle East currently contributes 63.5% of the group's overall revenues, compared to 27.6% in Malaysia and 8.9% in India.
Executive chairman Tan Sri A K Nathan said: “The financial performance of the Group for the second quarter of 2014 in terms of profit has not met our expectations. However, we are pleased to note that our projects in Malaysia have been progressing as scheduled, hence, increasing its share of the Group’s revenue and profit contribution.
"Eversendai’s foray into the oil & gas offshore and marine sectors is part of our prioritised key initiatives to drive long- term growth. It is off to a positive start after we secured the construction of 2 units of liftboats at a combined value of RM588mn ($187mn) million back in May 2014.
"This is only the beginning as we look forward to securing more contracts in the liftboat, process module and petrochemical plant sectors."