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Friday, 31 October 2014, 17:50 HKT/SGT

Source: PT Wintermar Offshore Marine Tbk
Wintermar Offshore Marine (IDX:WINS) Records 6% Growth in Gross Profit for 9M2014
- WINS gross profit for the nine months rose to USD 46.5million (+6%YOY) and EBITDA amounted to USD 56.2 million
- WINS revenue from Owned Vessels increased by 10% YOY to USD 82.8million for 9M2014 due to new vessel addition

JAKARTA, Oct 31, 2014 - (ACN Newswire) - PT Wintermar Offshore Marine (IDX:WINS) today reported gross profit for the nine months rose to USD 46.5million (+6%YOY) and EBITDA amounted to USD 56.2 million. WINS revenue from Owned Vessels increased by 10% YOY to USD 82.8million for 9M2014 due to new vessel additions.

Owned Vessels

Fleet additions in 1H2014 contributed to the increase in Owned Vessel Division revenues to USD 82.8 million for 9M2014, a 10% YOY increase. However, Gross Profit margins for Own Vessels shrank to 49%, reflecting a fall in utilization in 3Q 2014 as several long term contracts ended and were not immediately renewed due to a lull in contract approvals by the regulators, in a year dominated by politics and corruption investigations. Direct costs rose by 15%, largely due to crew expenses as more qualified crew were recruited to operate the higher tier vessels, and maintenance costs linked with some repairs and upgrades for vessels in between contracts. Gross Profit from Owned Vessels rose by 6%YOY to USD 40.4 million for the period under review.

Chartering Division

As a result of the market environment, our Chartering Division also experienced a fall in revenue by 24%YOY to USD 41.4 million for 9M2014, as there were fewer contracts awarded while tenures became shorter. However as margins in chartering are much lower than Owned Vessel Division margins, this did not have any major impact on our total gross profit. Through our investment in our internal management systems and strengthening our QHSE team, WINS continues to increase our capacity to win tenders for high value vessels which may not be as easily accessible to other third party OSV owners.

Indirect expenses rose by 16%, largely contributed by higher salary expenses of 31% as we continued to build up our human capital through recruitment of more experienced vessel managers and technical personnel to handle our growing fleet of more specialized vessels. Total operating profit for the nine months ending September 2014 was USD 36.8 million compared to USD 35.6 million in the previous year, a gain of 3%.

Other Income and expenses

Due to the acquisition of 3 new vessels in the first half, and the conversion of some loans from floating to fixed rates last year, interest expenses including finance related costs rose to
USD 9.3 million for 9M2014 compared to USD7.8 million in the previous nine months. This accounted for most of the increase in Other Expenses.

Net Income

Net income before taxes for 9M2014 was USD 27.9 million, a slight decrease compared to the same period in 2013. After taxes and minorities, net income attributable to shareholders of WINS amounted to USD 18 million against USD 18.8 million for the corresponding nine month period in 2013.

Assets and gearing

Our present net gearing of 85% at the end of 3Q2014, is lower than net gearing of 96% as at end December 2013, despite the addition of new vessels to our fleet this year. This is the result of our actions to strengthen our balance sheet in 1H2014 in preparation for a challenging second half. This was done through the raising of some equity through a placement and the conversion of our convertible loan into equity. We are therefore well prepared to ride out the near term lull in offshore activity while being able to expand once the demand for OSVs resumes.

Industry Environment

As anticipated, the 3rd quarter of 2014 proved to be the most challenging this year, as the lack of progress on contract approvals in the first half took its toll on vessel utilization rates. Several large projects which were contracted in 2013 concluded work in this quarter and in particular some notable deepwater projects anticipated to start this year have been delayed due to lack of approvals from the regulator. WINS has been very active in marketing our deepwater-ready vessels on short term spot work as well as opening up new markets in Myanmar, Brunei and recently, Bangladesh, in addition to working in India, Malaysia, Thailand and Vietnam. Although the margin on overseas work is lower than our domestic market, these recent contracts are part of our strategy to strengthen our international footprint by building a regional track record to support our long term vision of being a leader in South East Asia.

However, the contract tenures, particularly in the high tier vessels, continue to be short and this will continue to impact our utilization rates for the balance of the year.

Against this challenging environment, we have managed to secure a 3 year contract for 2 high tier vessels for deep water development support with a major oil company. This has brought our contracts on hand up to USD 116 million as at end September 2014.


President Joko Widodo's "Working Cabinet" comprising several experienced professionals in key roles with their stated priority on building up the maritime and energy industry in Indonesia, bodes very well for the long term growth of our company, which is exposed to both these industries. We remain optimistic about the future of the offshore oil and gas industry as a driver of growth in Indonesia. However, we recognize that it will take some months for the new Cabinet to settle into their roles before activity in our sector picks up. In the meantime, we have established our international marketing team and have been lining up work in neighbouring markets like Myanmar, Vietnam and Brunei where there is still good demand for deepwater vessels.

Our strategy to build up our high value fleet remains intact, with 65% of our fleet now positioned in the high value segment comprised of mid-tier and high-tier vessels. We are looking ahead and planning for more value added vessels in 2015 and particularly in 2016 which is when we would expect a significant pick up in exploration and development activity in deepwater fields.

Ms Pek Swan Layanto
Investor Relations
PT Wintermar Offshore Marine Tbk
Tel +62-21-530-5201 Ext 401
Email: investor_relations@wintermar.com

Topic: Earnings
Source: PT Wintermar Offshore Marine Tbk

Sectors: Gas & Oil, Daily Finance, Logistics & Supply Chain
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