Singapore-listed offshore services provider CH Offshore posted lower profit of USD3.8 million, down 35.1% year on year (y/y) for the third quarter of financial year (FY) 2014/15.
The decline in profit was followed by the lower revenue of USD7.79 million in third-quarter FY 2014/15, down 13.1% compared with USD8.9 million in third-quarter FY 2013/14. The decrease in earnings was due to an overhaul of two vessels, one of which was demobilised in January 2015 while another vessel was scheduled for demobilisation around mid-March.
Similarly, CH Offshore’s gross profit after direct depreciation dropped 20% to USD4.6 million in third-quarter FY 2014/15 compared with USD5.7 million in third-quarter FY 2013/14. The lower gross profit was attributed to the decrease in revenue as two vessels were not fully utilised during third-quarter FY 2014/15 because of the major overhaul.
In addition, the company’s gross profit was offset by the slight increase of 3.5% in direct depreciation to USD1.853 million in third-quarter FY 2014/15 compared with direct depreciation of USD1.79 million in third-quarter FY 2013/14.
Subsequently, CH Offshore also saw rising costs that dented its profit margins. For instance, administrative expenses rose 47.9% from USD0.862 million to USD1.275 million. The increment was mainly due to a higher legal fee, advisory fee, and other related expenses the company had incurred as a result of the voluntary conditional cash offer by offshore marine oil and gas company Energian in third-quarter FY 2014/15.
CH Offshore cited in its filing to Singapore Exchange that the higher legal fees paid for the ongoing litigation case caused the administrative expenses to overrun by USD221,000. In addition, the company also incurred losses in exchange of approximately USD171,000 as the US dollar continued to strengthen at the end of the third quarter.
The company expects a challenging market ahead because of the low crude oil price, oversupply, and low demand in the offshore support vessels market. In the meantime, CH Offshore will take all appropriate measures to maintain the fleet utilisation for profitability.