Otto narrows Q4 loss, ends year in the black

Singapore

OTTO Marine sank to a net loss of US$9.7 million for its fiscal fourth quarter after three quarters of gains, even though it managed to report a net profit for the full year.

The offshore and marine group's net loss for the October-December 2013 period was, however, substantially lower than the net loss of US$66.8 million a year ago. The company said the Q4 results last year were primarily affected by a forex loss of US$4.8 million and the dry docking of vessels which were due for their five-year survey.

For the full year, Otto Marine made a net profit attributable to shareholders of US$14.08 million, compared with a loss of US$103 million in FY2012. Gross profit grew 450 per cent to US$46.5 million, led by higher profits from its chartering and shipbuilding business, while profit from leasing and subsea fell sharply.

Chartering gross profit doubled to US$31.3 million despite flat revenue of US$265.55 million, resulting in a gross profit margin of 12 per cent compared with 6 per cent previously. The company said lower operating costs led to the higher profits. Chartering accounted for 67 per cent of group gross profit.

Otto Marine owns and charters out a diversified fleet of 65 vessels ranging from ultra-large anchor handling tugs and supply vessels (AHTS) to crew transfer vessels, working with oil majors and offshore exploration and production companies.

Gross profit from the group's shipyard posted a turnaround to a profit of US$11.8 million compared with a loss of US$0.25 million previously. The group's shipbuilding, repair and conversion division was the second-largest contributor to gross profits.

The group also posted a gain of US$64 million on the deconsolidation of Reflect Geophysical, following a court order to wind up the company. This was offset by a doubtful debt provision of US$45.3 million for debts due from Reflect.

The group said it will continue to grow its chartering fleet and maximise utilisation rates and optimise efficiency in both the offshore services vessels (OSVs) and the subsea sectors. The group continues to see growing demand for its services in the deepwater sector.

While management expects the shipbuilding industry to remain challenging, it said the group is increasing its order intake of repair and fabrication projects as well as select newbuild orders for the Indonesian cabotage markets, even as outstanding contracts for more complex and high-spec vessels are being completed and delivered.

Otto Marine shares closed trading yesterday at 8.7 cents, down 0.1 cent.