Vallianz posts 26.2% rise in Q3 earnings on improved operating profits

IMPROVED operating profits helped boost third-quarter earnings at Vallianz Holdings by 26.2 per cent.

The offshore support vessel owner and operator on Monday announced a net profit of US$5.9 million for the three months to Dec 31, up on the US$4.7 million in the same period a year earlier.

Earnings per share was unchanged at 0.13 US cent.

Vallianz told the Singapore Exchange in a filing that the group registered a 71.1 per cent increase in operating profit before share of losses by associates and joint ventures, to US$7.7 million.

This was the result of a reduction in depreciation expenses and the group's strategic focus on its core chartering and brokerage services business, which saw gross profit margin expand to 33.4 per cent, compared with 26.7 per cent previously.

It added that the group's earnings would have been even higher for the quarter if not for an exceptional expense resulting from a bad debt written-off at its 49 per cent-owned unit in Mexico, amounting to US$5.9 million.

Revenue rose 29.6 per cent to US$53.6 million due mainly to the commencement of four new charter contracts with a key national oil company customer in the Middle East and revenue contributions from provision of vessel management services.

Net profit for the nine months ended Dec 31 jumped 64.3 per cent to US$15.4 million, even as revenue fell 14.9 per cent to US$136.1 million.

Vallianz chief executive Ling Yong Wah said the group expects to continue deploying additional vessels over the course of the next two quarters.

"There are tentative signs of a recovery in crude oil prices as the strategies by Opec and Russia to curb crude oil production have led to a tighter demand-supply situation," he said.

"Notwithstanding the improved conditions in the global oil and gas industry, the offshore support vessel (OSV) segment continues to face a challenging operating environment. Due to an overhang in vessel capacity amid slow demand, intense competition among OSV operators continues to depress vessel utilisation rates and exert pressure on charter rates."

Still, Vallianz has been able to forge ahead on its strategy to focus on securing long term vessel charters with national oil companies, Mr Ling said.

The group has grown into one of the largest OSV players in the Middle East and has also made inroads with new customers in Egypt and Turkmenistan.

Vallianz's chartering services order book stood at about US$900 million as at Dec 31, comprising mainly long term charter contracts that stretch up to 2025, inclusive of 2-year extension options.

Shares of the group closed at 1.3 Singapore cents last Friday.