Wintermar Offshore Marine (WINS:JK) has announced results for 1Q2021. Wintermar is back in the black with net profit before tax of US$0.2 million, after three quarters of net losses.
Business conditions have improved in 1Q2021 since the worst of the pandemic in 2020. Utilization still remains below the level achieved in 1Q2020, but the trend is positive. Total revenue of US$10.2 million recorded in 1Q2021 is still 21% below the level of US$12.9 million achieved in 1Q2020. Despite this, the Company was able attain a positive contribution at the gross profit, operating profit and also at the comprehensive net profit level for 1Q2021 due to cost control measures taken in 2020.
–Owned Vessel Division
Owned Vessel Revenue for 1Q2021 was 16% YOY lower at US$8.35 million as utilization remains at 61% compared to 69% in 1Q2020. There was a delay in the commencement of operations for a large project in Indonesia due to repairs needed on the rig which caused some committed vessels to be idle. However, due to a 29% YOY reduction in direct costs, the Owned Vessel division showed a YOY jump of 170% in Gross Profit of US$1.8 million compared to US$0.7 million in 1Q2020.
Maintenance costs fell significantly by 39% YOY to US$0.5 million, as there was less work compared to 1Q2020 when several vessels were being prepared for work. Crew and operating costs both reduced by 16% YOY as a result of fewer vessels after the sale of 5 vessels in 2020. Depreciation was also significantly lower as a result of a smaller fleet, asset impairment of US$4.5 million taken in 2020 and an adjustment in useful life of assets. Fuel bunker however, rose by 74% YOY to US$0.2 million due to a new wet contract in 2021.
–Chartering and Other Services
Chartering revenues of US$1.5 million for 1Q2021 recorded a 36% YOY decline while Revenues from Other Services fell by 45% YOY to US$0.4 million as these segments which were badly affected by the pandemic have not yet recovered. Both business segments continued to contribute gross profit of US$0.36 million in total for 1Q2021 compared to US$0.62 million in 1Q2020.
–Indirect Expenses and Operating Loss
The cost efficiency measures involving sale of vessels and a reduction in shore employees, plus the voluntary salary reductions taken by senior staff led to a 21% YOY fall in Indirect Expenses to US$1.2 million in 1Q2021 from US$1.5 million. Although the hiring freeze was lifted and the Company took on new employees in 2021, total salary costs were still 26% YOY lower at US$0.08 million. Administration, utility and travel costs were also 35%, 26% and 72% lower respectively on a YOY basis, as employees continued to work from home for most of the first quarter in line with higher COVID-19 precautions in Jakarta. Marketing costs in 1Q2021 rose by 159% compared to the previous year due to bid bond costs as the Company participated in several tenders. These increased costs reflect the more positive mood in the industry as more tenders are being issued in 2021 as compared to the negative environment a year ago.
For 1Q2021, the Company recorded an Operating Profit of US$0.95 million compared to an Operating Loss of US$0.23 million in the same period last year.
–Other Income, Expenses and Net Attributable profit
Interest expenses continued to reduce by 23% to US$0.7 million as debt levels decline. Associated companies reversed losses to turn in a small profit compared to losses the previous year. There were no vessel sales in the period under review whereas in the previous year the Company booked a profit of US$1 million from vessel sales. Total other expenses amounted to US$0.7 million for 1Q2021, compared to income of US$0.4 million a year before.
The Company recorded US$0.2 million in Net Income Before Tax for 1Q2021, nearly the same as the previous year. After tax expenses and minority interests, there was a Net Loss Attributable to Shareholders of US$0.3 million whereas the Company made a small profit in the same period last year.
EBITDA for 1Q2021 US$4.3 million, 16% lower compared to 1Q2020, but higher than the each of the preceding three quarters.
–Oil & Gas Industry
2021 has brought fresh optimism around the world as most major countries have been actively vaccinating their populations, resulting in more traffic and the opening up of some sectors of the economy. The new variants and alarming escalation of infections in India demonstrate that the recovery will not be smooth, but economic data around the world has turned more positive.
Similarly, there has been a turnaround of sentiment in the oil and gas industry, with most predictions showing a bottom in 2020-2021 and anticipating higher investment along with a stabilizing oil price above US$50/barrel. This has also been reflected in the Offshore Supply Vessel (OSV) market which has seen increased transactions of second hand vessels since the start of the year.
There are more tenders in 2021 compared to last year, although charter rates in the region have not yet risen as much as in the North Sea. The highest tendering activity has been in Malaysia and Brunei, while Indonesia has lagged.
–Strategy and Outlook
There is now more optimism in the OSV industry. Apart from participating in more tenders, the stronger balance sheet with the successful rescheduling of debt to longer maturities gives the Company room to consider new investments.
2021 marks the 50th year of operations of the Wintermar Group and the start of a leaner fleet, the achievement of the Company’s professed target since its public listing 10 years ago. The push towards more efficiency is continuing, as the Company has embarked on a project to use technology to improve crew management and reporting.
The pandemic has accelerated the Company’s use of technology and one positive impact is the stepping up of crew and staff training via video, while zoom meetings have actually increased the number of management interactions with vessel crew which in the past was limited to on physical visits on board. Crew development and training will continue to be a big area of emphasis as one of the Company’s sustainability strategies.
The debt equity ratio of the group is now 33% and there will be room to invest in the coming months should there be attractive opportunities.
Contracts on hand as at end March 2021 amount to US$64.8 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 an 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