POSH Posts $17.5M Net Loss in 2Q 2016, Revenue Dips 35% to $46.1M

PACC Offshore Services Holdings Ltd. (POSH), a Singapore-based offshore services provider to the upstream oil and gas industry, posted a net loss of $17.5 million for second quarter 2016 (2Q 2016) that ended June 30, compared to a net profit of $6.1 million a year ago, according to financial results it released Tuesday.

Revenue was down 35 percent to $46.1 million in 2Q 2016, down from $71 million in the corresponding period last year, with the decline attributed to the challenging conditions across the industry as its three major business segments registered weaker performance.

Turnover of POSH's offshore supply vessels (OSV) segment declined 38 percent in 2Q 2016 to $19.7 million, down from $31.5 million, with revenue hit by lower charter rates from discounts on rates previously contracted, reduced rates of new contracts and lower utilization levels from project delays.

There was also a 37 percent decline in income from the offshore accommodation segment to $16.6 million, compared to $26.3 million a year ago as charter rate for the POSH Xanadu semisubmersible accommodation vessel upon its contract extension and lower utilization of the firm's light construction vessels.

POSH's transportation and installation business posted a steep 52 percent fall in 2Q 2016 revenue to $3.9 million from $8.1 million in the previous year. The dip in revenue was due to largely to lower charter rates and utilization levels arising from reduction in capital spending and the cancellation of projects by oil companies.

POSH's harbor services and emergency response unit was the only major business segment posting higher revenue in the quarter, which rose 16 percent to $6 million, compared to $5.1 million a year ago amid improved utilization from new charters and a higher number of spot jobs for its harbor tugs.

The company noted that capital spending in the offshore oil and gas industry has slowed significantly and oilfield operators continue to seek further operating cost reductions, which would weigh on POSH’s vessel utilization and charter rates this year.

"Our financial performance this past quarter is a reflection of the continued uncertainty surrounding our industry. Management will focus on achieving positive net operating cash generation through cost reduction and improving vessels utilization. We are encouraged by our recent contract wins including for POSH Arcadia and eight of our offshore supply vessels," Captain Gerald Seow, CEO of POSH, said in the press release.