PT Wintermar Offshore Marine Tbk (WINS:JK) has announced results for 1H2023. Wintermar’s Gross Profit from Owned Vessels jumps to US$3.1 million for 1H2023 from US$0.2 million in 1H2022 on the back of 32.6%YOY increase in Owned Vessels revenue to US$ 19.2 million.
Total Gross Profit increased 140%YOY to US$5.4 million for 1H2023, while total revenues were 24.4% higher at US$31 million, largely driven by higher charter rates and additional fleet commencing operations.
Owned Vessel Division
In the first half of 2023, Owned Vessel gross profit experienced an exceptional increase to US$3.1 million, generated from revenues of US$19.2 million. This was achieved as a result of securing higher charter rates, in spite of a decrease in fleet utilization from 66% in 1H2022 to 61% in 1H2023. The lower utilization was due to a transitionary period where some vessels came off longer term contracts and were undergoing necessary maintenance before being deployed to new contracts.
As a result, maintenance costs increased by 80.0% YoY, with the majority of the increase focused on the higher value vessels. Bunker costs also rose by 23% to US$1.3 million due to a higher number of vessels being out of contract. In expectation of higher rates in the second half of the year, management was more selective in tendering for work during the period, which contributed to the lower utilization.
The Company currently owns a fleet of 42 vessels, including 9 additional higher value vessels that were acquired since 2021, including 1 mid-tier vessel acquired in 2Q2023. Of the 9 additional vessels, 6 were operational in 2Q2023, 2 more commenced work in June and July, with 1 expected to be deployed in the second semester of 2023, leaving only 1 left in the process of reactivation.
Chartering and Other Services
For the first half of 2023, Chartering Revenue was nearly flat at US$8.1million compared to US$7.9million in 1H2022. Due to lower margins the gross profit from Chartering Division fell by 26.5%YOY to US$0.7million. This was also due to one of the chartered vessels being acquired in 2Q2023 as the Company had secured a long-term contract for it. Other Services Revenue and Gross Profit increased significantly to US$3.8million (+47.2% YoY) and US$ 1.6 million (+40.7% YoY), respectively.
Indirect Expenses and Operating Profit
Management continued to exercise tight cost control in the first half of 2023. There was a one-off reversal to employee pension liabilities from the change in the omnibus law which resulted in a 4.5% YOY decrease in indirect expenses to US$3million.
Due to the much-improved industry conditions and controlled expenses, the Company booked an operating profit of US$2.4million for 1H2023 compared to a loss of US$0.9million in 1H2022.
Other Income, Expenses and Net Attributable Profit
Interest expenses fell by 26.1% YOY to US$0.5 million, as the group continued to reduce its outstanding bank debt. This resulted in a net debt-to-equity ratio of just 6.5% at the end of the first half of 2023.
The strong performance of the business resulted in a net income attributable to shareholders of US$1.1million for the first half of 2023, compared to a loss of US$1.0million in the same period of 2022.
The group’s EBITDA also jumped by 64% YOY to US$8.7 million.
Outlook for O&G and the OSV Industry
The International Energy Agency (IEA) released its May Oil Market Report, projecting global oil demand to reach 103m b/d in 2024 from the previous estimate below 103m b/d provided in July 2022. This represents an upward revision from the red to the blue demand curve in Figure 1. Oil supply as we know has been constrained by several years of underinvestment due to lackluster oil prices since 2015.
The more positive oil demand forecast combined with global concerns over energy security triggered by embargos on Russian oil has caused a strong upturn in oil and gas investment. Rystad projects a recovery in oil and gas investments to reach US$ 600 billion by 2025. For South East Asia alone, there are US$ 135 billion worth of investments which have been approved, but the biggest jump in investment is in the offshore deepwater segment, as can be seen in the dark blue part of the bar chart in Figure 2 below. Deepwater investments typically require more technologically advanced OSVs with Dynamic Positioning systems of DP2 certification, like Platform Supply Vessels (PSV) and larger Anchor Handling Tug Supply (AHTS).
The supply of OSVs in SE Asia has been getting tighter in the past six months as the commencement of drilling projects in the Middle East, Africa and Latin America has attracted available and operationally ready OSVs to those geographical locations. Charter rates in SE Asia have lagged those markets but have started to improve in 2Q2023. With the current rise in approved projects in the coming years, we expect even tighter conditions in the OSV market in Asia for the next few years.
Company Business Outlook
Wintermar expects a stronger performance throughout the remainder of the year, driven by the successful award of several contracts for high-tier vessels. These contracts feature charter rates that are much higher than previous contracted rates, with commencements expected in Q3 and Q4 of 2023. This positive development aligns with the overall improvement in OSV market conditions followed by the rising global OSV utilization and increasing charter rates.
As at end of June 2023, the Company’s Contracts on hand amounted to US$ 79 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 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.
For further information, please contact:
Ms. Pek Swan Layanto, CFA
PT Wintermar Offshore Marine Tbk
Tel +62-21 530 5201 Ext 401