Singapore-listed offshore services provider PACC Offshore Services Holdings’ (POSH’s) net profit dropped 99.9% year on year (y/y) to USD21,000 for the first quarter of 2015, compared with USD36.6 million for the first quarter of 2014.
The lower net profit was recorded despite a slight revenue increase of 9% to USD57.58 million in the first quarter of 2015 from USD52.9 million in the first quarter of 2014. This was due to the initial revenue recognition from the commencement of charters from two newbuilds: POSH Xanadu, a 750-pax semi-submersible accommodation vessel, and POSH Endurance, a 238-pax light construction vessel. Both vessels commenced their charters towards the end of first-quarter 2015.
However, the company’s gross profit fell 49% y/y to USD7.9 million in first-quarter 2015 because of higher costs incurred by its offshore support vessel segment and initial costs of newly delivered vessels.
Meanwhile, POSH also suffered losses incurred from its joint ventures in Mexico at USD1.3 million for first-quarter 2015. The losses from the company’s joint venture in Mexico arose mainly from operational costs incurred by vessels prior to their ownership transfer to group subsidiaries and are not expected to recur.
Moreover, POSH’s other income decreased significantly to USD3.3 million, down 91% y/y in first-quarter 2015. The decrease was due to lower gain from the sale of vessels in that period, compared with USD35.8 million recorded in the first quarter of 2014 from the gain of five vessel sales, which amounted up to USD25.9 million.
Moving forward, POSH expects more “headwinds” from the oil and gas industry. POSH CEO Gerald Seow foresees “oil price volatility and macroeconomic uncertainty” for the year, but remains confident of the industry’s long-term prospects.
In the meantime, POSH has secured long-term contracts worth USD140 million, which will commence and contribute to the company’s earnings from the second quarter of 2015. In addition, the company expects its offshore accommodation segment to contribute significantly to POSH’s financial performance for the remainder of the year.