Singapore-listed offshore services provider Otto Marine posted a loss of USD13.27 million for the first quarter that ended on 31 March 2015 despite recording higher revenue for the period.
Revenue increased by 91.8% to USD148 million in the first quarter of 2015 from USD77 million in the corresponding period the year before, while gross profit increased 2.9% year on year (y/y) to USD1.89 million from USD1.84 million.
The increase in earnings was due to higher external revenue contribution from Otto Marine’s shipyard segment, which increased by USD90.6 million as a result of the sale of a substantially completed vessel using the percentage of completion method. However, the company’s shipping and chartering segment’s revenue decreased USD14.9 million because of lower utilisation and charter rate amid the current challenging market condition.
In tandem to the higher revenue, gross profit increase was offset by the decrease in revenue for the shipping and chartering segment and the increase in depreciation arising from the capitalised dry-docking costs in 2014.
In addition, Otto Marine faced higher finance costs in the first quarter of 2015 at USD8.09 million, up 24.1%, compared with USD6.52 million in the first quarter of 2014 due to interest incurred on certain loan facilities drawn down after that period. Similarly, the company’s share of associate and joint venture loss increased by USD1.0 million, primarily due to lower utilisation of the associates’ vessels.
Otto Marine expects a persistent challenging market condition, especially in the oil and gas industry, putting pressure on the company’s performance. Therefore, the offshore services provider has implemented cost cutting measures to remain competitive and in the same time stepping up its efforts in securing new contracts.