Otto Marine 2Q Losses Lower

 

• Marked improvement in performance as losses after tax for 2Q2015 reduced to US$2.5 million from US$13.3 million in 1Q2015.

• Group secured new chartering contracts worth a total of US$132.2 million in 2Q2015 and that brought total order book to US$307.2 million as at 30 June

• Fleet utilization improved gradually from 59.2% for 1Q2015 to 74.0% for 2Q2015

Otto Marine Limited, a leading offshore marine company that specializes in building complex offshore support vessels, ship chartering and offers specialized offshore services, is pleased to announce their financial results for the second quarter 2015.

The Group posted US$71.2 million in revenue for 2Q2015. This represented a 51.9% decrease quarter-on-quarter compared with 1Q2015 and a 36.4% decrease year-on-year  compared with 2Q2014 due to a reduction in fleet size and lower charter rates, and decrease in ship conversion revenue.

Gross profit increased 655.6% q-o-q to US$14.3 million in 2Q2015 due to lower cost of sales. Hence, gross profit margin improved from 1.3% in 1Q2015 to 20.1% in 2Q2015.

Selling and administrative expenses has reduced by 9.7% q-o-q to US$7.3 million in 2Q2015, following the Group’s broad-based pay and head count cut and other cost rationalization measures.. However, finance costs increased from US$8.1 million in 1Q2015 to US$9.2 million in 2Q2015 arising from increased vessel ownership.

As a result of the above factors, the Group reported a net loss after tax of US$2.5 million for the period 2Q2015, an 81.3% improvement q-o-q from 1Q2015.

OUTLOOK

The Group has added US$132.2 million new chartering contracts in 2Q2015, bringing total order book to US$307.2 million as at 30 June 2015. While the Group reduced its fleet size in view of the depressed market conditions, it has secured an addition new charter orders, which brought the utilization rate from 59.2% for 1Q2015 to 74.0% for 2Q2015.

Commenting on the financial performance for the quarter, Mr. Michael See, Group CEO said:

“It has been a tough time for the industry, and we have rolled out a series of measures in marketing and operation to ensure optimal performance in this challenging environment. The shipyard segment has remained profitable in 1H2015. As for shipping and chartering segment, in view of the potential costs that idle vessels would incur, we made substantial efforts in securing new chartering orders and improved the utilization rate.

While we enjoy better margin from our owned vessels, we lower our costs for chartered in vessels through negotiating with the owners for contract tenures that are co-terminus with our charterers’ required tenures. This also frees up our resources to enable us to charter in other technologically advanced vessels that bring in immediate contracts in response to the charterers’ request.

Australia has been a much stable market for chartering as supported by mainly LNG projects. In the North Sea Market, we still maintain a reasonably healthy utilization rate for our vessels which are mainly the larger size, DNV-class vessels capable to operate in deep water. Latin America and Africa markets see better performance than Asia.

Our marketing and operational strategies are validated by the improved financial performance in 2Q2015. With our sheer diligence and vigilance, we remain confident that Otto Marine will ride through the difficult times and emerge stronger and ready to embrace better performance when market starts to recover.”

Commenting on the financial performance for the quarter, Mr. Michael See, Group CEO said, “It has been a tough time for the industry, and we have rolled out a series of measures in marketing and operation to ensure optimal performance in this challenging environment. The shipyard segment has remained profitable in 1H2015. As for shipping and chartering segment, in view of the potential costs that idle vessels would incur, we made substantial efforts in securing new chartering orders and improved the utilization rate.

"While we enjoy better margin from our owned vessels, we lower our costs for chartered in vessels through negotiating with the owners for contract tenures that are co-terminus with our charterers’ required tenures. This also frees up our resources to enable us to charter in other technologically advanced vessels that bring in immediate contracts in response to the charterers’ request.

"Australia has been a much stable market for chartering as supported by mainly LNG projects. In the North Sea Market, we still maintain a reasonably healthy utilization rate for our vessels which are mainly the larger size, DNV-class vessels capable to operate in deep water. Latin America and Africa markets see better performance than Asia.

"Our marketing and operational strategies are validated by the improved financial performance in 2Q2015. With our sheer diligence and vigilance, we remain confident that Otto Marine will ride through the difficult times and emerge stronger and ready to embrace better performance when market starts to recover.”