JAKARTA, Apr 29, 2016 - (ACN Newswire) - Wintermar Offshore Marine (IDX:WINS) has reported 1Q/2016 financial results. EBITDA rose 3% YOY to US$9.4 million, despite revenue falling over the same period last year, reflecting tighter cost control amidst the difficult industry environment.
Depressed oil prices continued to impact the oil and gas industry in 1Q/2016 as intensified price competition pushed down charter rates. This resulted in a 19% YOY fall in revenue to US$15.4 million for the Owned Vessel division.
Although utilization at 57% in 1Q/2016 was lower than the 61% achieved in the same period the previous year, it was an improvement compared to 4Q/2015 where the quarterly utilization was lowest at 53%. The better utilization in 2016 compared to the final quarter in 2015 was due to some increased activity which saw the commencement of operations for a few high tier vessels which had been idle most of the past year.
Chartering Division revenues remained flat in 1Q/2016 compared to the same period the previous year, but margins were slightly better, resulting in a 7% increase in gross profit to US$0.8 million.
Due to the completion of a one off project during 1Q2016, Other Revenue fell to US$194,000 from US$2.9 million in 1Q/2015. However, contribution from this Division is small, falling to US$195,000 from US$234,000 over the same period last year.
Depreciation rose by 3% YOY for 1Q/2016 because of two new vessels in our fleet during the past 12 months, the latest addition being a mid tier AHT vessel that joined our fleet in 1Q/2016. Although direct costs in our owned vessel division are generally fixed in nature, the measures taken to reduce our cost base succeeded in bringing down direct vessel costs by 19% YOY to US$11.8 million, despite having more vessels. This was largely due to a fall of 36% YOY in crewing costs, the largest component of direct cash costs, in 1Q/2016. The gross margin was the same at 23.3% for 1Q/2016 compared to a year ago.
Gross Profit was US$ 4.6 million for 1Q/2016, 16% lower YOY but it was a significant improvement on the gross profit of US$2.2 million in the previous quarter in 4Q/2015.
Indirect expenses and operating profit
Tighter cost control and a hiring freeze resulted in a 31% YOY fall in indirect expenses for 1Q/2016 with salary related expenses contributing to more than half of the reduction in indirect expenses.
As a result, operating profit rose 3% to US$2.6 million in the 1Q/2016 compared to 1Q/2015.
Other Income/ Expenses and EBITDA
Interest expenses fell 7% YOY to US$2.3 million as a result of net debt reduction as the company continued to pay down debt over the past 12 months.
In line with the strategy to raise cash and reduce financial risk of the company, there were two vessels sold in 1Q/2016, resulting in a book loss of US$1.9 million from sale of fixed assets. This was partially offset by a turnaround in equity in net earnings of associated companies, which recorded a profit of US$0.5 million compared with a loss of US$0.17 million in 1Q/2015.
Because of the book losses on sale of vessels, there was a loss of US$1.4 million attributable to shareholders.
EBITDA for the 1Q/2016 was US$9.7 million, a rise of 3% YOY compared to 1Q2015. However, if compared to the last quarter of 2015, EBITDA actually increased by 28% QOQ from US$7.6 million.
Assets and Gearing
There was one new mid tier vessel delivered in January which had started operations by the end of the quarter, while two vessels were sold.
Net gearing fell to 55% as compared to 65% at end of 1Q/2015.
Oil prices seem to have moved off the lows recorded in January this year, despite the lack of agreement on output controls amongst the major oil producers in and outside of OPEC. However, there is still poor visibility regarding the direction of oil prices for the rest of the year.
Although there is some evidence for a more stable oil price outlook for the rest of the year, this does not necessarily imply that vessel charter rates will rise. The offshore support vessel industry is still plagued by oversupply and depressed charter rates, which we believe will take some time to work through. This we believe will keep pressure on pricing for the rest of the year.
We are therefore still cautious for the outlook in 2016, although there is cause for improvement in 2017. Domestically there are some signs of activity planned for 2017 onwards. However, with no consensus from the major oil producers to limit output increases, oil prices are likely to remain low.
We therefore still expect a very competitive environment in 2016 leading to continued low pricing for the near term.
Management continues to focus on cost control while maintaining high safety and quality standards. The slowdown in activity in the past 12 months has enabled senior management to focus on strategic organizational issues and safety campaigns, which during the past years of high utilization were not easily addressed. At the same time, we continue to strengthen our presence in foreign markets, which have enabled our vessels to secure work despite the lack of demand in our domestic market.
Indonesia's growing need for energy will continue to underpin the oil and gas industry. We are therefore confident that the longer term outlook for oil and gas is still positive.
Ms Pek Swan Layanto
PT Wintermar Offshore Marine Tbk
Tel: +62 21 530 5201 Ext 401
Email: [email protected]
Topic: Press release summary
Sectors: Gas & Oil, Logistics & Supply Chain
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