Wintermar suffers widening loss despite higher operating profit

By Romel S. Gurky

IDX-listed shipping company PT Wintermar Offshore Marine Tbk reported Friday widening financial loss last year despite higher operating profit.

The company said in a statement that attributable profit to shareholders reverted to a loss because of asset impairment. Total loss attributable to shareholders for FY2016 was US$16.0 million compared to a loss of $5.7 million in the previous year.

The company said that operating profit last year jumped by 68 percent to $4.9 million from $2.9 million in the previous year, despite difficult business environment. Gross profit for FY2016 rose by 6 percent to $13.6 million as compared to $12.8 million in the previous financial year.

?In what was an extremely challenging year, management took certain actions to preserve cash flow and generate higher utilization. As a result WINS was able to generate higher operating profit and cash flow, thereby reducing the net gearing to 50 percent at the end of FY2016 compared to 57 percent the year before,? Wintermar said.

Wintermar expects better business environment going forward. The company said that for most of 2016, the outlook for oil prices was very volatile with little confidence in a recovery. Over the two years 2015 and 2016 there were significant reductions of 26 percent and 23 percent respectively in global E&P spending. This prolonged lack of spending on Exploration and Development of oilfields will significantly slow down supply growth in the long term, according to research by the International Energy Agency (IEA), which warned that demand and supply trends point to a tight global oil market.

The OPEC decision to cut production by 1.2 million barrels per day in November 2016 set a floor to the oil price causing it to rise to above US$50/brl. ?This, combined with the supply constraints from the two year investment slump has triggered a sustained recovery in oil prices and a general consensus that the bottom of the oil cycle is behind us.?

Elsewhere, the company said that In the Owned Vessel Division, full year revenues of $58.9 million were 11 percent lower than the previous year. Gross profit from Owned Vessels fell 5 percent YOY to $8.6million for FY2016 compared to the previous year.

?To mitigate the slump in domestic demand for Offshore Support Vessels (OSV), we marketed our vessels more aggressively in international markets, resulting in some lump sum costs for mobilization and maintenance to prepare for international work in the fourth quarter (Q4).? The continuation in 2015 of some older contracts which had been suspended since the oil crisis started also led to higher utilization of high tier vessels for 2016 compared to 2015. ?Our fleet cost reduction program continued, reducing direct costs by 12 percent YOY.?

By end 3Q2016, however, most of the ?preoil crisis? contracts had been completed, which impacted our utilization rate. The poor visibility for oil prices for much of 2016 meant that only very few and very short contracts were given out during the year resulting in sporadic utilization of our high tier vessels. ?Our average fleet utilization stayed around 56 percent for FY2016 compared to 57 percent the previous year.?

Gross profit from Chartering rose by 53 percent to $3.7 million and from Other income was flat at $1.3million, compared to the previous year.

?We took delivery of one new Anchor Handling Tug (AHT) in 2016 and sold two older vessels. However, our cost control program effectively reduced total Direct Expenses for the Owned Vessels division by 12 percent to $50 million for the full year 2016 compared to $57 million the previous year.?

EBITDA for the full year 2016 was $33 million, a rise of 8 percent compared to $30.7 million the previous financial year. ?We also raised some new funds from vessel sales in 2016.?

With the improvement in EBITDA and sale of vessels during the year, the company made net debt repayments of $27.7 million during the year. ?Our total interest bearing debt, other than subordinated shareholder loans, reduced from $160.7 million at end 2015 to $133 million by end 2016. Net gearing has improved to 50% at year end 2016, compared to 57% the previous year end, which has also brought down our interest cost.?

After impairment, our total fleet value is carried at $323 million. ?Our net book value was $231 million at end 2016.?

Editing by Reiner Simanjuntak