Ezra Holdings posts net loss of US$55.3m

MAINBOARD-LISTED Ezra Holdings Ltd on Thursday reported a net loss attributable to owners of US$55.3 million for the three months ended Nov 30, 2015, dragged by the weak offshore support and production services division.

This is a reversal from the US$54.4 million net profit a year ago.

The group's revenue for the first quarter of 2016 rose 19 per cent year on year to US$152.3 million, lifted by Triyards, which is part of its marine services division.

The marine services division reported an increase of US$45.4 million in revenue for Q1 2016 compared to a year ago, mainly due to higher contribution from the Triyards Group as there were more self-elevating units and vessels under construction compared to the previous corresponding period, as well as higher contribution from engineering design work.

But the increase in group revenue was partly offset by a US$19.3 million fall in revenue in its offshore support and production services division, comprising EMAS Offshore Ltd.

This was primarily due to general weakness in the offshore industry in addition to seasonal fluctuation as a result of monsoon in Asia. The shallow water platform support vessels segment continues to remain weak, said Ezra.

Cost of sales grew 37 per cent to US$136.5 million for the quarter.

Due to softness within the offshore support vessel segments, gross profit margin for the group fell from 22 per cent in Q1 2015 to 10 per cent in Q1 2016.

Gross profit for the period dropped 44 per cent to US$15.7 million.

Loss after tax came in at US$53.7 million which included a realised hedging loss of US$13.9 million.

Lionel Lee, Ezra's group CEO and managing director, noted that the global oil and gas industry continues to be challenging for the offshore marine and subsea companies. "The volatility of the oil price and the depressed state of the oil and gas industry has led to reduced activity and uncertainty in new contract awards. Like other oil and gas support services companies, we are currently working in opposition to industry tide and against difficult market conditions during this downcycle."

He added that 2016 will be a tough year for the group and that it will "focus on improving vessel utilisation and project execution as well as winning contracts".

In its outlook, Ezra said the offshore support and production services division is likely to experience lower charter rates and decreased vessel utilisation, which will weigh on the group's financial performance. "As the marine services division diversifies its products and services, the group believes that there will be continued demand for its offerings, notwithstanding the competitive and challenging environment," it added.

Separately, last August, Ezra entered into a strategic agreement with Chiyoda Corporation for Chiyoda to invest in Ezra's subsea services business to form EMAS Chiyoda Subsea - a 50:50 joint venture. The completion of the transaction is expected to take place in the first quarter of this year.