Ezra Records Net Loss of $53.7M in 1Q FY16 as Industry Downturn Lingers

Ezra Holdings Limited, a Singapore-based contractor and provider of integrated offshore solutions to the oil and gas industry, recorded a net loss of $53.7 million for the first quarter of 2016 (1Q FY16) ending Nov. 30, 2015, down from a net profit of $60.6 million a year earlier as the firm attributed the decline to a challenging market arising from low oil prices, according to financial results it released Thursday.

The company had issued on Friday a profit guidance for 1Q FY16 ahead of the release of its latest quarterly results. In it, Ezra indicated that its financial performance would be negatively impacted by the continuing depressed state of the oil and gas industry which has adversely affected activities in the global offshore marine and subsea industry.

Revenue however rose 19 percent in the same quarter to $152.3 million, compared to $128.1 million, supported by higher contribution from its Marine Services division. This was partially offset by a decrease in revenue of $19.3 million from the Offshore Support and Production Services division as well as a marginal decline of $1.9 million from the Energy Services unit.

Ezra's Marine Services division, comprising predominately TRIYARDS Holdings Ltd., reported a $45.4 million year-on-year increase in revenue for 1Q FY16. TRIYARDS contributed more to the division "as there were more self-elevating units and vessels under construction as compared to the previous corresponding period, as well as higher contribution from engineering design work," the firm said in its press release.

Lower revenue for the Offshore Support and Production Services division, made up largely of contributions from EMAS Offshore Limited, was mainly due to general weakness in the offshore industry, exacerbated by seasonal fluctuation resulting from the monsoon in Asia. Weak demand for shallow water platform support vessels (PSV) continues to linger in the industry, while the lackluster demand in the offshore support vessel segment eroded Ezra's gross margin to 10 percent in 1Q FY16, compared to 22 percent in the previous year.

"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,”Lionel Lee, Ezra’s Group CEO and managing director, said.

Going forward, the company expects the industry environment to remain extremely difficult.


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Chee Yew has covered the upstream and downstream sectors of the oil and gas industry in Asia for more than 15 years. Email Chee Yew at cheeyew.cheang@rigzone.com

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