EMAS offshore reports full-year loss; warns of write downs, grim outlook

EMAS reports full-year loss of S$137.2 million and quarterly loss of S$98.5 million.

EMAS offshore reports full-year loss, warns of write downs, grim outlook
The SEADRILL 3, the first of four oil rigs that Keppel FELS is building for the same customer, is seen in Singapore in this April 21, 2006 file photo. REUTERS

Singapore's EMAS Offshore reported a full-year loss of $265.3 million (S$137.2 million), adding that the net loss for the three months ended 31 August 2016 stood at $98.5 million.

The offshore services company said extremely challenging market conditions and impairments continued to weigh on financial results.

For the full year, Emas recorded revenue of US$167.6 million, compared with US$247.2 million in the year-ago period. "This decline in revenue was the result of continual weakness in the offshore industry leading to markedly lower demand as well as general oversupply in the offshore support vessels ("OSV") segment," the company said in a statement.

Gross losses were US$49.8 million as compared to gross profit of US$29.4 million in the previous corresponding period.

Emas also took a US$56 million charge on its shares in associate company Perisai Petroleum Teknologi and wrote off US$12.2 million deposits paid for vessels under construction, it said in a filing with the Singapore Exchange.

It also warned of make further impairments on account of the weakness in the oil and gas sector as well as the oversupply in the offshore oil and gas support industry.

"The market continues to paint an extremely challenging landscape for the Group. Amidst this, one bright spot for the Group is that we are starting to see signs of stabilisation in utilisation rates though daily charter rates are expected to remain depressed for a considerable period of time," EMAS Offshore CEO Captain Adarash Kumar said.

He said 2017 will continue to be an extremely challenging period for the group and that it will go ahead with plans to strengthen financial position and conserve cash.

Rising job cuts

The offshore and marine industry in Singapore is facing a crisis as companies have cut spending to manage the fall in oil prices. Earnigns at marine services companies like Sembcorp Marine and Keppel Corp, as well the shipbuilding and offshore support companies, have been hit by the industry downturn.

In South Korea, which is home to the largest ship builders in the world, companies are facing down grim prospect of job losses. The Korea Labor Institute has estimated that up to 40,000 jobs could be eliminated in the country's shipbuilding industry, which has already seen 20,000 jobs go this year.

Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries have all been affected by a continued downturn in the oil sector, which has caused delays in rig and vessel deliveries.