Malaysia's offshore support vessel (OSV) provider ICON Offshore Berhad posted an 18.5 percent decrease in first quarter 2016 (1Q 2016) revenue to $12.76 million (MYR 51.83 million), compared to $15.66 million (MYR 63.59 million) a year ago, while incurring a net loss of $800,000 (MYR 3.26 million) from a profit after tax of $670,000 (MYR 2.71 million) in the corresponding period, the company said in its financial results Thursday.
The company attributed the lower revenue to sustained low activities in the petroleum industry, resulting in lower fleet utilization rate of 45 percent in 1Q 2016, down from 56.5 percent in 1Q 2015, and a reduction in daily charter rates for several existing and new contracts.
“As a result of weak oil prices and the lack of development activities by the oil & gas majors, the market condition for the OSV sector remains highly challenging which has adversely impacted all OSV operators. Nonetheless, we are optimistic that the recent improvement in global oil prices will inevitably serve as a catalyst to restart offshore development activities, thereby bringing much needed demand for support services players,” ICON Managing Director Amir Hamzah Azizan said in the announcement.
Leveraging on the company's sound fundamentals and ability to secure new contract wins, ICON’s short-term focus is to take the necessary and financially prudent steps to ride out the present unfavorable market conditions. This includes a restructuring its capital and operating cost structures, undertake fleet rationalization to focus on quick wins and driving fleet utilization through competitive bidding.
“ICON views the current downturn as a strategic window to recalibrate and reset its core business activities and operations. By exercising financial discipline to conserve cash flow and optimize operational costs, we are confident that ICON will emerge from the current business environment leaner and more nimble to capitalize on improvements in the market when they occur,” he added.
“At the same time, ICON continues to look towards strengthening and entrenching its position in external markets like Brunei while looking at diversification into new markets as well. We will also consider and explore avenues for consolidation through M&As (mergers and acquisitions) as and when such opportunities arise.”
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