Market Overview

Wintermar Offshore Marine Positive 1H2018 Financial Results

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JAKARTA, July 30, 2018 - (ACN Newswire) - Wintermar Offshore Marine (WINS:JK) has reported 1H2018 gross profit of US$4.8 million, compared to a loss of US$1 million for 1H2017, driven by a 34% jump in Owned Vessels Revenue from better utilization of high tier vessels.

Rising revenue combined with good cost control led to margin expansion in 1H2018 compared to 1H2017, driven by a turnaround in the high tier vessel segment. After the past three years of cost cutting exercises, management has started to increase investment in our crew and operations team in order to maintain the high standards required by our clients as business activity improves. As a result, crew and maintenance expenses have been raised in anticipation of higher utilization in the second semester of this year.

Owned Vessels Division

High tier vessels continued to show strong utilization above 70%, which raised gross margins for the first half. However, low tier vessel utilization fell to 32% as the company stepped up efforts to sell the older low tier vessels, thus lowering our average utilization rate to 64% for the second quarter compared to 70% in 1Q2018.

As two contracts involving high tier vessels were completed in 2Q2018, there was a slight drop in revenue for the 2nd Quarter compared to the first. However, the level of tendering activity is still improving, with some projects scheduled to commence in 4Q2018 and we are confident that the recovery in the upstream market is in place.

Crew costs were higher by 6%YOY compared to 1H2017, in line with the higher utilisation for the period. Fuel cost increased again from the full quarter's impact of the "wet contract" where our charter rate includes fuel, which commenced in mid 1Q2018.

Chartering and Other Services

Although Chartering Division revenue and profit are still much below the levels of 1H2017, there was a quarter on quarter improvement in gross profit from the Chartering Division to US$100,000 in 2Q2018 compared to US$58,000 in 1Q2018.

Indirect Expenses and Operating Profit

Staff expenses were 8% higher in 1H2018 compared with the first half the previous year as we invested in building up our vessel teams to handle a higher level of fleet utilization. Overall indirect expenses were flat as the higher staff expenses were offset by lower professional fees and travel costs.

Operating profit for the first half of 2018 was US$963,830 compared to a loss of US$4.8 million in same period the previous year.

Other expenses and interest bearing debt

Despite a trend of rising interest rates over the year, interest expenses fell 20% YOY in 1H2018 to US$3.1 million owing to debt repayment according to schedule. Total long term debt declined from US$107.2 million as at December 2017 to US$75.9 million as the Company paid down US$31.3 million of debt over the past 6 months. Equity in earnings of Associates recorded a loss of US$1.4 million, and there was a net forex loss of US$180,000.

Net loss attributable to Shareholders narrowed to US$4.4 million for 1H2018 compared to US$7.4 million in 1H2017.

EBITDA

EBITDA of US$14.4 million for 1H2018 was 63% higher than 1H2017, reflecting better result from operations and cost structure.

In June, the Company sold two vessels back to its associated company for a total valuation of US$15.2 million, which was offset against the outstanding loan, thus bringing down the net gearing to 34% by end of June 2018. This transaction, which was reported in the previous newsletter, will help improve future cash flows and overall vessel utilization in the coming years.

Outlook for Offshore Support Vessels (OSV)

There is a growing consensus that oil supply will be tight which lends support to oil prices. Although shale oil production has been rising, it is compensated for by falling supply from Venezuela and Iran.

New offshore projects have been commissioned in the North Sea and Middle East, while in Indonesia, several projects have started operations again after having been suspended for over two years. There are requests for tenders for projects commencing in 4Q 2018 and onwards. All these factors have improved the demand for OSVs significantly.

Increasing rates of scrapping and lower numbers of new OSVs entering the market has created a better balance in the global Offshore Supply Vessel (OSV) market. This together with more drilling offshore drilling projects being commissioned has led to better prospects in global charter rates for PSVs and AHTS. Day rates for charter of OSVs in the North Sea and Middle East have already started to improve, while day rates in South East Asia have bottomed and likely to trend upwards. Some of the more well-known global OSV players are starting to form alliances and mergers, but in Asia, there are still companies undergoing liquidation or bankruptcy.

Although in Indonesia there has been a pause in the awarding of longer term vessel tenders in 2Q2018, there have been several spot tenders awarded in Indonesia and a higher level of tendering activity with commencement dates from 4Q2018 to next year.

Against this industry outlook, we are aiming to maintain a strong balance sheet by deleveraging where possible. We will also use the available cash flow to build up a stronger operational base for future growth opportunities in the coming year.

Total contracts on hand as at end June 2018 were US$69 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.

Source: Wintermar Offshore Marine Group

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




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