Gulf Navigation posted a 28.5 per cent increase in first-quarter net profit, but serious concerns remain over its debt load.
Net profit in the three months ending March 31 rose to Dh6.3 million from Dh4.9m a year earlier, the company said on Wednesday in a statement to the Dubai Financial Market.
Revenue rose 11 per cent to Dh38.2m from Dh34.5m.
Despite the growth in revenue and profit, the Dubai-listed company had net current liabilities of Dh604m at the end of March and accumulated losses of Dh235.9m, according to the statement.
“These conditions … indicate the existence of a material uncertainty which may cast significant doubt upon the ability of the group to continue as a going concern”, according to auditors EY.
“The ability of the group to continue as a going concern is reliant upon continued availability of external debt financing and/or additional equity and the group’s ability to reverse or mitigate the impact of adverse awards through legal defence/and or negotiations.”
Gulf Navigation aims to repay US$35m in outstanding debt this year and is working on a turnaround strategy that includes cost cuts to increase profitability, the new group chief executive Khamis Juma Buamim said last month.
The shipping company is negotiating to settle with its creditors.
Its board approved in January the first round of a $60m mandatory convertible bond programme, which it hopes will help to ease the pressure from creditors.
Mr Buamim said the company has enough funds to help settle the debts and expand the company’s services.
Gulf Navigation shares are up by about 70 per cent so far this year. At midday on Wednesday, they were down 1.8 per cent for the day.
Gulf Navigation owns 8 chemical tankers, plus four crew boats which are used in its shipping services business.
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