Wintermar Offshore Marine (WINS:JK) has announced turnaround results for 9M2021 with a net profit of US$0.49 million following a loss of US$7.44 mil in 9M2020.
Stronger oil prices and measures to streamline the fleet and reduce gearing helped in turning the Company around after several years of heavy losses. In line with the positive outlook for oil prices, utilization also improved to 66% in 9M2021 compared to 63% in 9M2020.
Owned Vessel Division
Owned Vessel Revenue for 9M2021 was reduced by US$0.2 million to US$24.4 million compared to 9M2020. During July and August, the delta variant of COVID-19 hit Indonesia hard and affected our operations in Asia. A few of our vessels were infected while crew change was delayed due to quarantine and travel restrictions, leading to unplanned downtime. This and the completion of some high end vessel contracts led to a lower margin for 3Q2021. However, since September the pandemic has waned significantly in Indonesia and business operations have recovered back to normal.
Despite the disruption from COVID-19, due to a much lower cost base and a smaller fleet, the Company made a US$4.1 mil gross profit this year for 9M2021 compared to a loss of US$2 million in 9M2020 on nearly the same revenue. Fuel costs rose to 37% as some high tier vessels were idle between contracts.
Chartering and Other Services
Contribution from the Chartering Division in 9M2021 jumped by 64% YoY from US$0.4 million to US$0.66 mil while contribution from other services also jumped 85% YOY to US$0.62 million in 9M2021 from US$0.34 million in 9M2020. These reflect the underlying improvements in offshore vessel demand.
Indirect Expenses and Operating Profit
Indirect expenses totaled US$3.92 million in 9M2021, falling 13% YOY from US$4.5 million, reflecting a much leaner organizational structure with lower overheads as compared to 2020. This has resulted from the fleet efficiency exercise over the past couple of years to sell less efficient vessels and reduce overheads. 9M2021 operating profit amounted to US$0.15 million.
Other Income, Expenses and Net Attributable profit
Since January 2021, the Company has sold 3 vessels and has already entered into a MOA to sell another three, registering in a US$2.4 million gain on sale of vessels. The total fleet now stands at 40 vessels. A total of US$9.5 million in vessel loans was repaid, bringing the Company’s net gearing down to 21.7% by end September 2021. Interest expenses for 9M2021 fell by 33% YOY to U$1.66 million in line with lower debt. Associated Companies generated income of US$0.24 million due to better operational results, bringing the other income to US$0.79 million for 9M2021 compared to a loss in 9M2020.
The stronger operational environment has boosted the bottom line, with net income attributable to shareholders of US$0.49 million for 9M2021, as compared to a US$7.44 million loss.
EBITDA for 9M2021 also rose by 13% YOY to US$10.2 million.
Oil & Gas Industry
As expected, the opening up of travel restrictions across the world has led to a spike in oil prices as supply has not been able to keep pace with growing demand for oil and gas. Global oil demand is expected to recover to pre-virus levels in 2H2022 and the 3rd quarter saw Brent crude oil prices breaking above US$85/barrel, levels not seen since 2014. This reflects the optimism in the oil and gas industry which has finally shown a cyclical recovery. In Indonesia, there are tenders for drilling projects due to start in early 2022.
In line with the oil price spike, there has been an increase in purchases of second hand offshore vessels, and prices have turned around as vessels which had been on offer for a while were bought up. The international rig count has also picked up as more investments have commenced. This is in line with our optimistic outlook for the industry in 2022.
Strategy and Outlook
Over the past few months, the Company has stepped up the sale of older and less productive vessels to take advantage of the improvement in second hand OSV prices. The fleet now stands at 40 vessels, and more are planned to be sold in 4Q2021. This strategy to reduce bank debt as well as keep some cash on hand has created a stronger balance sheet. As banks are still reluctant to lend for vessel acquisition, the Company now has the flexibility to acquire assets as and when the opportunity arises without having to wait for bank loan approval.
Contracts on hand as at end September 2021 totalled US$64 million.
About Wintermar Offshore Marine Group
Wintermar Offshore Marine Group (WINS.JK), developed over nearly 50 years with a track record of quality that is both a source of pride and responsibility that we are dedicated to upholding, and sails a fleet of more than 48 Offshore Support Vessels ready for long term as well as spot charters. All vessels are operated by experienced Indonesian crew, tracked by satellite systems and monitored in real-time by shore-based Vessel Teams.
Wintermar is the first shipping company in Indonesia to be certified with an Integrated Management System by Lloyd’s Register Quality Assurance, and is currently certified with ISO 9001:2015 (Quality), ISO14001:2015 (Environment) and OHSAS 18001:2007 (Occupational Health and Safety). For more information, please visit www.wintermar.com.
Ms. Pek Swan Layanto, CFA
PT Wintermar Offshore Marine Tbk
Tel +62-21 530 5201 Ext 401