Ezra Posts 1H16 Net Loss of $336M, Compared to $65M Net Profit Last Year

Singapore-based Ezra Holdings Ltd., an oil and gas integrated offshore solutions provider and contractor, reported a first half 2016 (1H FY16) loss of $336.4 million for the period ending Feb. 29, 2016, compared to a profit after tax of $65.3 million a year ago, the company said Thursday in the release of its financial results.

The company posted 1H FY16 net losses despite generating a 2 percent increase in revenue to $263.4 million, up from $257.1 million in the corresponding period last year, with the gains due to increased contribution from Marine Services division.

"In light of the depressed market conditions, the Group has taken the prudent step in 2Q FY16 to recognize impairments, as well as write offs of bad debts, net of $18.9 million, and allowance for doubtful debts, net of $48.6 million. These adjustments, which are non-cash in nature, have impacted the financials of the Group," Ezra said in the press release.

Meanwhile, there was a 14 percent year-on-year (YOY) decline in revenue to $111.2 million for second quarter 2016 (2Q FY16), weighed down by lower revenue of $40.4 million and $7.8 million from the Offshore Support and Production Services division and the Energy Services division, respectively.

The weaker performance from the Offshore Support and Production Services division, predominately EMAS Offshore Ltd. (EOL), resulted largely from the downturn in the offshore industry and weak results from the shallow water Platform Support Vessels (PSV) and Anchor Handling Tug Supply (AHTS) segments.

On the other hand, its Marine Services division, dominated by TRIYARDS, reported a YOY increase in revenue of $30.3 million for 2Q FY16, supported mainly by higher contribution from the Triyards Group which was building more self-elevating units and vessels compared to a year ago as well as higher contribution from engineering design work.

Going forward, Ezra expects the Offshore Support and Production Services division to continue experiencing lower charter rates and decreased vessel utilization. The division has taken impairment to its assets in 2Q FY16 and will closely monitor the market condition to assess if further impairment is required. The firm is however more optimistic about the market outlook for the Marine Services division given its diversified products and services across the oilfield fabrication value chain.

“Our performance for the quarter under review has largely been impeded by the lower charter rates and decreased vessel utilization sustained by our Offshore Support & Production Services division, and this trend is expected to follow on in the ensuing months. The second half of the year will nonetheless continue to be a challenging period for the Group, as we witness reduced oil and gas spending across the globe and ongoing uncertainty in new contract awards,” Lionel Lee, Ezra’s Group CEO and managing director said.

Meantime, Ezra and EOL announced plans to divest one of their two floating production, storage and offloading (FPSO) vessels, Lewek EMAS. The deal will allow EOL to strengthen its financial position and sharpen the focus on the company’s business in the offshore support sector.

“Boosting our liquidity and strengthening our balance sheet remain our key priorities, as we are taking steps on the refinancing front and through the divestment of non-core assets. We will continue to focus on operational excellence and debt structure optimisation to tide over the difficult market conditions. With the EMAS CHIYODA Subsea JV having commenced operations in April, we believe the Group is in a better position to secure larger contracts as we are now able to leverage on the combined expertise together with a strong partner,” Lee added.

Japan's Chiyoda Corp. completed its investment in Ezra's subsea services business, EMAS AMC, to form EMAS CHIYODA Subsea -- a 50:50 Joint Venture at the end of March.


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