Wintermar Offshore (WINS:JK) Reports FY2023 Results

Wintermar Offshore Marine (WINS:JK) has announced results for FY2023. Wintermar’s net attributable profit jumped by 501.1%YOY to US$ 6.7 million for FY2023 backed by higher charter rates.

Higher utilization and rising charter rates towards the 4th quarter lifted gross margins and led to a strong operational performance in FY2023 with EBITDA up 24.4% to US$21.8million on total revenue of US$72.6 million (+19.0%YOY).

Owned Vessel Division

The Owned Vessel Division’s revenue saw a 33.3% YOY increase to US$ 48.2 million, outpacing the owned vessel direct cost growth of 22.4%. Maintenance costs increased by 70.9% in 2023, with 3 additional mid tier vessels starting operations in 2023 and the full year effect  of 1 additional high tier vessel which commenced work in late 2022. These costs will stay high in line with our growing fleet of high tier vessels. Operations costs rose by 64.4%, as result of increased operational cost due to a larger number of vessels working outside Indonesia where agency and other costs are higher. Additionally, fuel costs were up by 30.5%, as result of mobilization and demobilization costs of vessels working outside Indonesia. Owned Vessel gross margins increased to 22.6%, up from 15.7% in FY2022, primarily due to increased charter rates. These improvements more than compensated for the higher direct expenses.

Full year utilization rate stood at 68% compared to 73% in 2022, impacted by low utilization in 2Q2023. This was due to a number of our high-tier vessels needing maintenance following the conclusion of long-term contracts.

Utilization was stronger towards the second half of FY2023, with 2H2023 utilization at 73% compared to 62% at 1H2023. The growth in Owned Vessel revenue was weighted towards the 2nd half as utilization and charter rates started to improve in the latter part of the year. Revenue from Owned Vessels grew 51.3% in 2H2024 compared to 1H2024. Gross profit from this division jumped by 91.8% YOY to US$10.9 million.

Throughout 2023, the Company broadened its operational capacity by acquiring two mid-tier vessels and bringing one lower-tier vessel back into service. Two more high tier vessels are now estimated to start operations only in 2H2024. By the end of the year, the Company’s total fleet size reached 44 vessels.

Chartering Division and Other Services

Chartering Division experienced a slight revenue drop of -4.4%, with Gross Profit from Chartering also decreasing by -54.9%YOY to US$1.1million from US$2.4million in 2022. Revenue from Other Services saw a increase of 4.5%. However, the gross profit for this division slightly declined, to US$3.1 million in FY2023, a 3.1% decrease from the previous year’s US$3.2 million.

Total Gross Profit for FY2023 stood at US$15.1million, a substantial 33.7% increase from the previous year.

Indirect Expenses and Operating Profit

Indirect expenses, rose by only 4.3%YOY at US$ 6.2 million.  The largest cost was higher salary expenses of US$4.8 million (+15.8%YOY) due to increased hiring in line with business recovery. Professional fees rose by 30.7% to US$0.3 million from US$0.2 million in 2022 due to implementation of a new internal communication and workflow management system. The rise in other indirect expenses was offset by a large non recurring reduction of US$0.7million in employee pension liabilities as a result of the Company’s adoption of the Omnibus Law and adjustment of US$0.2 million over accrual in 2022, which led to an income of US$0.26million  instead of expense under employee benefit.

Operating Profit for FY2023 was US$8.8 million, which increased 66.5% compared to the previous year.

Other Income, Expenses and Net Attributable Profit

Interest expenses decreased by 12.9% YOY to US$1.2 million as the Company cut its debt by US$5.9 million throughout the year, reducing its net gearing to only 3.0% as of 31 December 2023.

Income from equity in associates increased to US$0.5 million in FY2023 from US$0.4 million the prior year, reflecting our share of the profits from an associate’s successful sale of a vessel.

The net profit attributable to shareholders for FY2022 amounted to US$ 6.7 million, a jump of 501.1 %YOY.

EBITDA for FY2023 increased by +24.4%YOY to US$21.8million.

Outlook for Oil and Gas Exploration

In 2023, the oil and gas industry saw a steady upturn, with global oil demand surpassing 100 million barrels per day for the first time. This demand upswing led to increased investment in upstream activities reaching the highest levels since 2015. Particularly in the Middle East, as well as in other regions worldwide, national oil companies escalated their spending to fortify national energy security by securing sufficient reserves of future supply  to meet energy demand.

The following charts illustrate the rising upstream oil and gas capital expenditure. Most of the new investments are offshore, with deepwater growing much faster than shelf.

Business Outlook 

In line with the data showing a concentration in offshore deepwater investments, there has been over the past year more aggressive charter rate hikes in particular for High Tier vessels that cater to deeper offshore waters. Until now, Indonesian charter rates have lagged behind the global market in adjusting to higher demand. However, with recent discoveries in Indonesia and the approval of the Masela Field plan of development late last year, there will be increasing deepwater exploration and development work in Indonesia in the coming years which will underpin demand for high tier vessels.

The supply for Offshore Support Vessels remains constrained, partly due to the industry’s anticipation and uncertainty over the renewable fuel of choice for next-generation propulsion technologies. These tight conditions are expected to persist, which should in turn gradually push rates higher in the coming years.

We have successfully secured contracts outside Indonesia in regions like India, Brunei, and Thailand, where we benefit from more favourable charter rates. Additionally, we are actively preparing two PSVs for operations that are anticipated to come online in the 2H2024, providing further growth opportunities for the coming year.

There are challenges in operating an older fleet with higher maintenance costs and unavailability of spare parts. We therefore expect higher annual maintenance and operational costs in line with our fleet age profile.  The nature of our contract tenures still being very much dominated by spot contracts, particularly in the High Tier segment, will add volatility to our quarterly revenue, on top of seasonality factors which usually contribute to a weaker first half.

Now that the Company has a much stronger balance sheet and low net gearing, management will be seeking opportunities for fleet rejuvenation to improve the fleet yield and diversify revenue sources through managing our fleet composition with investments in the current year.

Contracts on hand as at end February 2024 amounted to US$75 million.

For further information, please contact:
Ms. Pek Swan Layanto, CFA
Investor Relations
PT Wintermar Offshore Marine Tbk
Tel: (62-21) 530 5201 Ext 401
Email: investor_relations@wintermar.com

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