Singapore-listed offshore services provider Otto Marine posted a loss of USD2.5 million for the second quarter ended 30 June 2015, from a profit of USD18 million recorded in the same period in 2014.
The company’s revenue dropped 36.4% year on year (y/y) to USD71.2 million in the second quarter of 2015 compared with USD111.9 million for the corresponding period last year. Following the lower revenue, gross profit plunged 46.8% y/y to USD14.3 million in the second quarter of 2015 from USD26.9 million in the second quarter of 2014.
The decrease in earnings were attributed to lower contribution from the company’s shipping and chartering business segment, as well as its subsea services segments. Both business segments generated lower revenues due to lower charter rates amid the challenging market condition.
Moreover, external revenue from Otto Marine’s shipyard business segment decreased by USD16.7 million y/y in the second quarter of 2015 mainly because of the completion of a major ship conversion project in the second quarter of 2014.
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Meanwhile, the decline in gross profit was partly due to the decrease in revenue and the increase in depreciation arising from the capitalised dry-docking costs in 2014 from Otto Marine’s shipping and chartering segment.
Otto Marine also incurred higher finance cost in the second quarter of 2015 by 59.7% y/y as interest incurred on certain loan facilities were drawn down after the first half of 2014.
Moving forward, Otto Marine feels that market conditions in the offshore sector are unlikely to improve significantly for the next 12 months.
“The group is focused on maintaining the vessels utilisation amid challenging charter rates through strengthening its order books and the rationalisation of its cost structure,” said Otto Marine in its filing to the Singapore Exchange.