Indonesia’s Wintermar Offshore Marine Posts 197% Profit Rise in 9 Months


Wintermar Offshore Marine (IDX:WINS), an Indonesian offshore marine services firm, has posted profit growth of 197%, year-on-year, to USD7.1 million in the first nine months of this year, reflecting better cost controls despite continued pricing pressure.

Wintermar Offshore Marine owns a fleet of 80 vessels ready to handle a large variety of marine support services required in upstream oil and gas exploration and production activities including transporting crew, equipment and supplies, as well as providing services such as anchor handling, towing, and mooring of offshore rigs.

In a news release, the company said its owned vessels posted a 22% year-on-year rise in gross profit to USD10.1 million for the nine months ended 30 September 2016.

“Although utilization of high tier vessels was higher than the previous year, there was a significant adjustment of charter rates which led to a YOY fall of 6% in Owned Vessel Revenues to US$ 47.2 million for 9M2016,” the company said.

Owned vessel margins were higher than the same period in the previous year only because of much tighter cost controls and warm stacking of ships. There were a number of projects which were completed in early 3rd Quarter that were replaced by contracts with new pricing leading to lower QOQ revenue.

Chartering gross profit from this division rose to US$ 2.4 million from US$ 1.8 million the previous year while gross profit from other sources rose to US$ 0.8 million for 9M2016 compared to US$ 0.5 million the previous year because of increased fee based services.

Management continued to implement tighter cost controls and warm stacking which resulted in a decline in Owned Vessel Direct expenses of 12% YOY to US$ 37.0 million for 9M2016, mainly resulting from lower crew and fuel bunker expenses.

Gross Profit grew by 28% in 9M2016 to US$ 13.5 million from US$ 10.5 million for 9M2015. Overall gross margin improved to 19.3% in this reporting period from 13.8% in the same period last year.

Lower salaries and savings in utilities from a small downsizing in office space contributed to a 22% fall in Indirect Expenses. This resulted in a jump of 197% YOY in operating profit to US$ 7.1 million for 9M2016 from US$ 2.4 million in the previous corresponding period.

“As we continued to pay down debt over the course of the year, interest expenses fell 10% to US$ 6.6 million. In view of the current industry conditions there was an impairment loss taken on our fleet amounting to US$ 13.1 million, which contributed to a total pretax loss of US$ 14.1 million for the period,” the company said.

EBITDA for 9M2016 rose by 23% to US$ 28.4 million as compared to 9M2015.

Although the company saw a 197% improvement in profitability at the operating level, the decision to take an impairment loss resulted in a net loss attributable to shareholders of US$ 7.5 million for 9M2016, as compared to a net loss of US$ 2.7 million for the period 9M2015.

The likelihood of an extended period of oversupply in the OSV industry, and future uncertainty in charter rates, the management have decided to take an impairment loss of US$ 13.1 million on the fleet. This represents 3.1% of our total assets. Net gearing fell to 53% as compared to 64% at end of 9M2015.

“As expected, competitive pressures in the Offshore Supply Vessel (OSV) industry continued to push down prices for the longer term work awarded. This will likely put pressure on our gross margins for the coming months. Some of the contracts we had in the earlier part of the year have concluded, and there are not many new projects starting until early 2017, which has contributed to lower activity and utilization in the second semester of 2016 compared to 2Q2016.”

However, on the marketing front there have been some new tenders for work starting in 2017. In addition, news of OPEC targeting lower production has provided strong support for oil prices. This combined with the reduction in production costs may result in free cash flows for oil companies at a lower break-even oil price. If this trend continues, there could be an upturn in upstream activities late 2017-2018 as oil companies start to invest in exploration again, it added. –