Wintermar reports sharp drop in revenue, profit
Friday, May 1 2015 - 07:19 AM WIB
IDX-listed oil and gas marine services provider PT Wintermar Offshore Marine Tbk (WINS) said that revenue in the first quarter (Q1) of this year dropped by 39 percent to US$29.2 million compared to the same period of last year, negatively impacted by severe cutbacks in oil and gas spending following the collapse in oil prices and uncertainty of oil price outlook.
Income attributable to shareholders plunged to $76,000 from $7.9 million.
After the steep drop in oil prices since late 2014, oil and gas companies all over the world have been cutting back on expenditures and retrenching staff in Q1 2015. Over the first three months of 2015, oil and gas companies announced drastic cost cutting plans in turn. As a result, most oil exploration projects have been postponed indefinitely and some ongoing projects were stopped. Rig utilization fell across the board, but particularly in the North Sea and USA.
"In Indonesia, oil companies initiated drastic cost reduction plans which led to postponement of projects and renegotiation of existing contract,whilst some rigs that had been working were even terminated," the company said in a statement on Thursday.
"Amidst this very challenging environment, revenues from our Owned Vessels segment fell 39% to US$ 29.2 million, as a result of termination of rigs and the postponement of exploration projects, which affected our high tier vessels more than the low and mid tier," it added.
Directed by SKK MIGAS, oil company clients also asked to renegotiate rates. Overall fleet utilization fell from 70 percent in Q1 2014 to 61 percent in Q1 2015. To mitigate this sharp downturn, Wintermar said it was able to deploy its high tier vessels on spot contracts in regional markets, albeit at lower gross margins.
Depreciation, which makes up nearly 50 percent of owned vessel direct expenses, is not a variable cost. Therefore as utilization rates fell,the gross margins for owned vessels fell to 23.4 percent in Q1 2015 leading to a 73 percent drop in gross profit from owned vessels to US$ 4.8 million from US$16.5 million in the same period last year.
Wintermar said chartering division revenues declined by 60 percent year-on-year as many projects were postponed or terminated by oil and gas companies as a reaction to the volatile oil price situation in the first quarter. Profit from chartering fell by half to US$ 0.75 million from US$ 1.5 million in the previous corresponding period.
Total direct expenses fell by 18 percent from US$ 29.2 million to US$23.8 million in Q1 2015, mainly contributed by the fall in chartering expenses as there were few new projects. Segmental direct expenses for owned vessels,however, went up, due to higher depreciation and crew costs arising from our fleet expansion into high tier vessels last year. These vessels require higher quality crew to operate because of more sophisticated technology.
Fuel expenses also rose, due to higher bunker consumption as utilization dropped to 61 percent from70 percent last year. Indirect expenses reduced by 17 percent YOY, as a result of some cost savings measures implemented by management. These included a hiring freeze and streamlining our organizational structure through a restructuring of responsibilities that achieved operational efficiencies with fewer personnel.
Wintermar said gross profit was US$ 5.4 million for Q1 2015, down from US$18.7 million, while operating profit was US$ 2.5 million, down from US$ 15.3million in Q1 2014.
Net other expenses fell by 19 percent YOY to US$ 2.5 million as a result of lower interest expenses, offset by a loss from associates
After tax and minorities, the income attributable to shareholders was sharply lower at US$ 76 thousand for Q1 2015 as compared to US$ 7.9 million in the first quarter 2014. EBITDA halved to US$ 9.8 million from US$ 21.4 million.
As there were no new loans disbursed in the first quarter,the net gearing ratio has improved to 65 percent as at 31 March 2015, compared to 67 percent at the end of 2014, the firm said.
The first quarter was exceptionally dismal, as oil companies started to cut costs and postpone activity due to global uncertainty stemming from the massive fall in oil prices. Exploration work was the first to be postponed, while production continues but with rate negotiations as the global oil and gas industry continues to be plagued by oversupply and uncertainty. Because of the lower oil price, total approved expenditure on upstream oil and gas projects in Indonesia has been revised down from US$ 22.2 billion to US$ 19.9billion, Wintermar said.
Editing by Reiner Simanjuntak