WINS 2Q2019 revenue rose 15% QoQ to US$14 million, strong improvement in Fleet utilization
Wintermar Offshore Marine (WINS:JK) has announced results for 1H2019. WINS 2Q2019 revenue rose by 15% QoQ to US$14 million with strong improvement in Fleet utilization.
With political distraction now behind us and the Presidential mandate secured for the next 5 years under President Jokowi, business was starting to recover in 2Q2019. Several offshore drilling projects commenced operations this past quarter, leading to better vessel utilization and a pick up in revenue.
Owned Vessel Division
High tier vessels had the best recovery, with utilization rate above 70% for 2Q2019. This drove Owned Vessel revenue up 21% QoQ to US$10.2 million in 2Q2019. Total fleet utilization for 2Q2019 rose to 58% compared to 41% in 1Q2019. Gross losses from this division narrowed in 2Q2019 to US$0.5 million compared to a gross loss of US$1.6 million in 1Q2019.
Despite the quarterly improvement, revenue for 1H2019 of US$26.5 million was still 19% below 1H2018, largely attributable to lower fleet utilization, charter rates still comparably much below than in the previous year and the impact of sale of a number of vessels.
Chartering and Other Services
Chartering revenues were up by 96% to US$6.2 million for 1H2019 compared to 1H2018 as the Company expanded revenues by taking on more projects in this non-capital intensive segment. Gross profit from chartering jumped to US$0.68 million for 1H2019 compared to US$0.16 million in 1H2018.
Direct Expenses & Gross Profit
Total Direct Expenses rose 8% to US$14 million for 2Q2019 compared to the previous quarter, largely owing to Hari Raya bonuses paid to crew as well as higher chartering expenses to support the Chartering division.
The Company broke even at the Gross level for 2Q2019, as Gross losses in the Owned vessel Division were covered by US$0.35 million gross profit from Chartering Division and US$0.27 million gross profit from Other Services.
For the first 6 months of 2019, the Company still recorded a gross loss of US$0.6 million owing to the poor first quarter of the year.
Indirect Expenses and Operating Loss
Indirect Expenses which have already been kept at a low level stayed flat for 1H2019 at US$3.8 million. At the Operating level, there was an operating loss for 1H2019 of US$4.4 million, compared to an operating profit of US$0.96 million in 1H2018.
Other Expenses and Interest Bearing Debt
Despite rising interest rates, Interest expenses for 1H2019 declined 25% YoY to US$2.34million, reflecting a 13.4% YoY decline in interest bearing debt, from US$75.9 million as at 30 June 2018 to US$65.8 million by 30 June 2019.
For 1H2019, improvement in operations at our associated companies also contributed to US$0.3 million of equity from net earnings of associates while vessel sales netted a profit of US$0.96 million for the first six months of the year 2019.
Net gearing as at end June 2019 was 38%.
Net Loss attributable to Shareholders & EBITDA
For 1H2019, the net loss attributable to shareholders was US$4.7 million, compared to US$4.4 million in 1H2018, while EBITDA was US$8.1 million for 1H2019 which is lower than 1H2018 following the sale of vessels and cancellation of certain bare-boat charters, but a significant improvement over 2H2018.
Oil and Gas Industry
This past quarter saw a dramatic escalation of tensions in the Middle East. Attacks on oil tankers in the Gulf blamed on Iran has triggered retaliation by the British and US, creating a volatile security situation in the most important shipping gateway for oil exports in the world. This and the decline in Venezuela oil production has continued to support a stronger oil price outlook.
In Indonesia, the long-awaited decision by Inpex to proceed with the US$20 billion investment in the Abadi field will support the offshore industry in the coming years.
Outlook for Offshore Support Vessels (OSV)
Oil and gas investments have started to rise in 2019, in particular showing some recovery in the offshore segment again. In Asia, activity is stronger in Malaysia, Myanmar and Brunei, with demand for support vessels starting to pick up. In Asia, certain segments of the offshore market are starting to be in demand, as operationally ready vessels are sought.
Strategy
Management has reduced the fleet size by selling 3 more low tier vessels in the first six months of 2019. The sale of older fleet has been accelerated to release cashflow for working capital.
To participate in other Asian markets where some degree of cabotage is in effect, the Company is also establishing working relationships with selected domestic partners in each country to establish a broader market presence in the region.
As activity picks up, there is good potential for growth in fee-related services like chartering and ship management which capitalize on the Company’s strengths and do not require high capital expenditure.
Discussions with bankers are progressing well for a longer-term solution to manage future cash flows.
Contracts on hand as at end June 2019 amount to US$75.8 million.
About Wintermar Offshore Marine Group
Wintermar Offshore Marine Group (WINS.JK), developed over 40 years with a track record of quality that is both a source of pride and responsibility that we are dedicated to upholding, sails a fleet of more than 70 Offshore Support Vessels ready for long term as well as spot charters. All operated by experienced Indonesian crew, tracked by satellite systems and monitored in real time by shore-based Vessel Teams.
In 2011, Wintermar became the first shipping company in Indonesia to be certified with an Integrated Management System by Lloyd’s Register Quality Assurance, comprising ISO 9001:2008 (Quality), ISO14001:2004 (Environment) and OHSAS 18001:2007 (Occupational Health and Safety). For more information, please visit www.wintermar.com.
Contact:
Ms. Pek Swan Layanto, CFA Investor Relations PT Wintermar Offshore Marine Tbk Tel: +62-21 530 5201 Ext 401 Email: investor_relations@wintermar.com
