WINS records 11% growth in net income for 1H2014

By Romel S. Gurky

IDX-listed shipping company PT Wintermar Offshore Marine (WINS) reported Friday that net income increased by 11 percent year-on-year (YOY)to US$12.8 million.

The company said in a statement that owned vessel revenues were up 23 percent YOY to $56.5million, reflecting the increase in its fleet over the past 12 months. Gross profit for owned vessels in the first-half of 2014 totaled US$30 million, an increase of 31 percent, reflecting average gross margins of 53 percent compared to 49 percent in 1H2013.

There were 3 new vessels acquired in the second quarter of 2014 of which 2 were high value vessels, namely, a Platform Supply Vessel and an Anchor Handling tug supply of 8000 BHP, the firm said.

Chartering revenue fell by 23 percent from $35.8 million in 1H2013 to $27.4 million in 1H2014, affected by delays in government approvals for oil and gas contracts. However, margins in this division continued to rise, thus driving a 7 percent increase in the gross profit from this division, it added. ?We would expect the chartering division to remain lackluster as the political factors continue to dominate for the rest of this year,? WINS said.

There were total other net expenses of $6.6 million in 1H 2014 compared to $4.5 million in 1H2013, contributed by slightly higher interest expenses of $5.8 million from $5.4 million from higher loans resulting from fleet expansion, no vessel sales in 2014, loss in our associate earnings, and expenses relating to the conversion of our convertible loan into equity.

WINS said Net income before taxes increased by 20 percent to $20.2 million compared to $16.8 million in 2013, and after taxes and minorities, net income attributable to shareholders of WINS amounted to $12.8 million against $11.5 million the previous year, an increase of 11 percent.

The company said that in contrast with the slower operating environment in the 2nd Quarter, WINS was active in 3 noteworthy corporate events:
1) IFC converted their $10 million convertible loan and became a shareholder of about 4.9 percent of WINS, cementing a long term relationship between the two parties.
2) WINS issued 116.9 million new shares to investors for $8 million; and
3) WINS bought a 51 percent stake in an Indonesian company, PT Fast Offshore Indonesia (FOI), which owns 4 units of Fast Multipurpose Supply Vessels (FMPV) which can be used to support deepwater drilling operations.

The 51 percent stake of FOI adds to our fleet 4 Indonesian flagged, sophisticated, aluminum hulled vessels with 10,000 BHP engines and capable of carrying passengers, cargo, and towing. Three of them are certified with Fire-fighting capabilities and Dynamic Positioning.

WINS now controls a fleet of 77 vessels, including 12 high tier vessels. The additional vessels will boost WINS high value fleet to provide a range of vessels ready to support deepwater drilling operations, where activity is expected to pick up in the coming years as several new concessions start development work in Indonesia. The vessels have previously been deployed to work in overseas markets and are ready for work in Indonesia as they comply with cabotage requirements.

?The pro-growth policies of the President-elect bodes well for the continued uptrend in the oil and gas industry, and we would expect the activity in the upstream industry to pick up again once the new Cabinet is installed towards the end of this year,? WINS said in an outlook statement.

Since early 2014, exploration activity in the oil and gas sector has slowed because of political factors causing delays in obtaining government approvals for larger contracts. ?With the Presidential election over, we are optimistic that the bottleneck will be soon addressed as one of the stated aims of the President-elect is to reduce bureaucracy and improve efficiency in government licensing procedures?, the company said.

?The delays in government approvals for large contracts has meant that our vessels exposed to exploration activity received shorter term contracts, leading to lower overall utilization rates in 2Q2014 compared to 1Q2014. This situation should reverse when the new government is fully operational by the end of the year,? it added.

?With our recent acquisition and equity funding, we have positioned WINS to anticipate a pickup in demand in 2015. In particular, as we expect the government to be committed to increase oil and gas production to keep up with demand growth, several large deepwater projects which were slated for 2014 are likely to pick up activity in 2015. We remain positive on the long term prospects for deepwater oil and gas development in Indonesia and with 65% of our OSV fleet now positioned in the high value segment, we are well positioned to serve the needs of the deepwater oil and gas industry,? WINS ended.

Editing by Reiner Simanjuntak