In line with fleet utilization which recovered from 46% in 1Q2019 to 77% by 4Q2019, revenue continued to pick up on a quarterly basis, totaling
*Owned Vessel Division
FY2019 started poorly as the Presidential elections in
Towards the second half, the fleet utilization rose consistently, led by high tier vessels which were employed in drilling projects. Utilization for high tier vessels picked up to 85% in 4Q2019 compared to only 60% in 1Q2019. The Company was awarded a seven year contract (including options) for 2 Platform Supply Vessels supporting drilling in
Due to the rising utilization of offshore vessels throughout the world, there is starting to be some upward pressure on crew salaries. The Company has tried to maintain some control over crew salary inflation and managed to cap the rise to 1% through exiting some smaller vessel segments. However, there is unlikely to be any more cost savings in crewing costs due to a higher proportion of foreign contracts which are more exposed to salary inflation.
The strongest recovery was in the Platform Supply Vessel segment, and our 4 PSVs have shown nearly 69% utilization for the year. We continue to be optimistic about this market as deeper water offshore projects are starting to be commissioned in the region, and charter rates in this segment have started showing a slight improvement.
The Company continued to streamline the Owned Vessel Segment by selling 5 more vessels in 2019 and laying up 6 vessels to reduce maintenance and certification costs. The total fleet size therefore continued to shrink to 48 by year end 2019 from 59 at the beginning of 2019. Most of the shrinkage in fleet resulted from selling and laying up low tier vessels.
*Chartering and Other Services
Building on management strategy to increase fee based income, more chartering business was won, resulting in a 33% increase in chartering revenue to
Other value added services fell in tandem with Owned vessel revenue, booking revenue of
*Direct Expenses & Gross Profit
Total Direct costs fell 7%, largely driven by a fall of 12% in Owned Vessel direct cost. All cost categories recoded double digit reduction except for crewing due to cost pressures on crew wages as the industry has been picking up globally.
Total Gross Losses for the full year 2019 were
*Indirect Expenses and Operating Loss
Indirect Expenses for FY2019 rose by 8% compared to FY2018, due to higher salary costs, partly due to some retirement benefits and the expensing of a 5 million management share allocation scheme @Rp120 per share. As the Company invested in training of management and staff in line with the upgrading our ISO certification to comply with the 2015 standards, this contributed to an increase in Professional fees to
*Other Income, Expenses and Net Attributable loss
As the Company continued to pay down debt and as interest rates started to fall, interest expenses fell by 12% to
Due to the above reasons, net loss before tax halved to
EBITDA for FY2019 amounted to
*Oil and Gas Industry
The recent isolation measures implemented globally to stem the spread of COVID-19 has caused a significant decline in demand for oil and gas. At the same time,
We have seen in the past that the Offshore Support Vessel (OSV) industry does not have an immediate impact from falling oil prices, as many of the contracts are for long term work and we expect the contracts we have won recently will continue to operate. Because there has been such significant cutbacks investment into offshore exploration and development in the past 5 years, there will be some capacity constraints in the coming years as existing oilfield reserves are being depleted without replenishment. The Saudi production ramp up will also raise utilization of rigs and OSVs.
Due to the shorter investment cycle in shale oil and relatively higher production costs, researchers are projecting that lower oil prices will have a bigger negative impact on the
*Outlook for Offshore Support Vessels (OSV)
At this time while the world adjusts to the reality of the economic costs of the COVID-19 crisis, it is not possible to accurately predict what will happen to the OSV industry. What is known is that the OSV industry has already had a 5-year downturn, which has led to consolidation amongst surviving companies and a healthier balance of supply and demand from increased scrapping of OSVs as many highly indebted companies have been liquidated.
As the OSV market has tended to operate on longer term charter contracts, we believe this provides a cushion in the near term for the industry. The ramp up of production by
In the past few months there has been strong demand from
*Strategy
Wintermar's fleet utilization has picked up gradually over the past three quarters, led by the high tier vessels which have also been awarded some longer term contracts which have commenced. We expect those to continue for the next few years.
Safety is of paramount concern and management have implemented Work From Home procedures for office based staff in anticipation of the escalation of COVID19 transmission in
As the OSV business is on a contractual basis, there has not yet been an immediate impact on the business activity. There are still some projects which are in the tendering stage, and there may be a risk of delay for these if government funding is diverted to the more immediate needs of COVID-19 relief and stimulation packages.
In the longer term, it is evident that the world will experience a significant economic impact from this global COVID19 crisis, and all countries and businesses will have to review and assess their individual responses. We are no different.
There may be an impact on the future business if there are significant cutbacks in the level of investment into offshore exploration and development. Management are monitoring the situation very closely and will adapt to the circumstances as required.
Contracts on hand as at end
About
Wintermar is the first shipping company in
Contact:
Ms. Pek Swan Layanto, CFA Investor RelationsPT Wintermar Offshore Marine Tbk Tel: +62-21 530 5201 Ext 401 Email: investor_relations@wintermar.com
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