Wintermar Offshore (WINS:JK) Reports FY2022 Results
PT Wintermar Offshore Marine Tbk (WINS:JK) recorded FY2022 gross profit of US$11.2 million, an 88% YOY growth, on the back of rising utilization and charter rates, and a 510%YOY jump in net profit to US$1.1 million. Higher utilization and rising charter rates contributed to a strong operational performance in FY2022 with EBITDA up 28% to US$17.5 million on total revenue of US$61 million (+44%YOY).
Owned Vessel Division
Offshore upstream activity picked up steadily over the course of FY2022 amidst a sustained rise in oil prices and continued tensions in Ukraine. Demand for OSVs, in particular in the higher value vessels, was stronger towards the second half of FY2022, and utilization of Wintermar’s fleet reached 83% in 4Q2022 compared to 61% in 1Q2022.
In 2022, the Company purchased 6 units of mid to high tier vessels, of which 3 units have commenced operations. Including the 2 units of Platform Supply Vessels (PSV) purchased in December 2021, Wintermar has added a total of 8 vessels to the fleet in the past 18months. At the end of December 2022, there were 4 vessels still undergoing reactivation, comprising 2 units of Platform Supply Vessels and 2units of 7000BHP AHTS. These vessels are expected to start operations in 2Q to 2H2023.
Revenue for the Owned Vessel Division grew by 9% YOY to US$ 36.1 million while direct costs for the division only grew by 4% for the same period. Operations and maintenance costs were higher in 2022 as more vessels were prepared for new contracts, and fuel was higher by 88% due to the mobilization and demobilization of vessels working outside Indonesia. Depreciation charges fell 7%YOY to US$12.1 million resulting from changes in fleet composition. The management repositioned the fleet into higher yielding vessels by selling older vessels and purchasing second hand but higher value vessels at lower prices during the past year to improve the average blended charter rate. One older vessel was sold in 2022, albeit at a book loss of US$ 2.6 million, but the reinvestment of the proceeds resulted in an improved return on assets. Crewing costs of US$ 8.8 million were 3% lower YOY as COVID-19 restrictions were lifted in 2022, negating the requirement for quarantines and PCR testing which had inflated crewing costs in the previous two years.
The growth in Owned Vessel revenue was weighted towards the 4th quarter as charter rates started to improve in the latter part of the year. Revenue from Owned Vessels grew 21% QOQ in 4Q2022 as utilization picked up to 83% for 4Q2022, which was the highest quarterly utilization in the past few years. Gross profit from this division jumped by 47%YOY to US$5.7 million.
Chartering and Other Services
During 2022, the Chartering Division saw a jump in revenue from a project in Brunei involving several vessels. Gross Profit from Chartering jumped 165%YOY to US$2.4 million from US$0.9 million in 2021. These contracts have durations of below a year and are scheduled to complete by end 2022- early 2023. In view of the robust demand, management is optimistic to win more contracts in the coming months. Gross profit from the Other Services Division increased to US$3.2 million for FY2022, +162%YOY from US$1.2 million in FY2021.
Total Gross Profit for FY2022 stood at US$11.2 million, a substantial 88% increase from the previous year, reflecting the turnaround in the offshore vessel industry.
Indirect Expenses and Operating Profit
Management continued to exercise tight cost control and indirect expenses rose by only 11%YOY at US$ 5.9 million. The largest cost increase was higher salary expenses of US$4.2 million (+23%YOY) due to the end of a hiring freeze and a reinstatement of salary for some senior management who had agreed to voluntary salary reductions in the past years.
Operating Profit for FY2022 was US$5.3 million, which was over 8 times the previous year’s operating profit.
Other Income, Expenses and Net Attributable profit
Net interest expenses were 35%YOY lower at US$1.4 million as management reduced debt by US$11.6 million during the year, bringing net gearing down to 8.8% by 31 December 2022.
Equity in net earnings of associates was lower at US$0.4 million in FY2022 compared to US$0.6 million the previous year as several vessels underwent docking in the year. There was a book loss on sale of vessels of US$2.6 million as part of the fleet repositioning exercise and a net impairment on receivables of US$0.2 million in FY2022.
The net profit attributable to shareholders for FY2022 amounted to US$1.1 million, an increase of 510%YOY.
EBITDA for FY2022 jumped by +28%YOY to US$17.5 million.
Outlook for Oil and Gas Exploration
2022 saw a convincing rebound in upstream oil and gas investments, reversing several years of lackluster capital expenditure in global upstream oil exploration and production (E&P). A confluence of factors – including the prolonged E&P under-investment due to the COVID-19 pandemic and a focus on energy security by North American and European governments amidst heightened geopolitical tensions – led to a global resurgence of investments in upstream E&P projects around the world.
The charts below illustrate the rising capital expenditure over the course of 2022 which resulted in a higher activity in the offshore supply vessel (OSV) space.
There has been a notable rise in requests for proposals and new tenders issued for OSVs in the second half of 2022. Indonesian charter rates have lagged the global market in adjusting to higher demand, but there are limited vessels available in the higher tier vessel space, so we expect the tighter supply conditions in 2023 to result in rate increases. In the past year, Wintermar has won some work in Myanmar, Brunei and Thailand where the charter rates are higher.
Several vessels had been locked in on longer term contracts for the past years, but more than half of these contracts will be completed by 1H2023 and new contracts should attract higher charter rates. There are still 4 vessels which are being prepared for operations which will come onstream between April to July 2023 which will provide growth in 2023.
With a stronger balance sheet and low net gearing, the Company continues to seek opportunities to invest in additional fleet in the current year.
Contracts on hand as at end February 2023 amounted to US$66 million.
Source: Wintermar Offshore Marine Group