OTTO MARINE: 1H10 revenues up 64.5% at S$406.3 million

CFO Michael See: Otto has a track record of building logistics vessels like bulk carriers, but wants to focus on high-spec vessels like offshore support or subsea vessels.

OFFSHORE MARINE group, Otto Marine grew its 1H10 revenues 64.5% year-on-year to reach S$406.3 million, thanks to growth in revenue recognized for building high margin vessels, chartering and its new geophysical businesses.

The strong revenue growth was partially offset by reduced utilization rates in the chartering of anchor handling tugs and barges.

“We are targeting equal revenue contribution from our 3 segments,” said CFO Michael See during an analyst briefing yesterday.

He was refering to firstly, shipbuilding, repair and conversion; secondly, chartering and thirdly, special offshore services.

Otto builds high-spec anchor handling tug supply vessels, owns a fleet of 31 offshore support vessels and has 4 special vessels for seismic data collection and subsea work.

Another 7 vessels will be added to its chartering fleet in the year ahead.

Gross profit increased 113.6% to S$89.6 million in 1H2010, translating to gross margins of 22.1% or an improvement of 5.1 percentage points margin-wise.

Current margins are more reflective of normal operating conditions as the previous period had been affected by 3 vessel cancellations, said Mr See.

1H10 gross profits were S$89.6 million

 

Net profit attributable to shareholders grew 19.2% to S$41.2 million, affected by a foreign exchange loss of S$24.8 million, of which S$19.7 million was unrealized.

The forex loss was due to the slide in the Euro (from US$1.43 on 31 Dec 2009 to US$1.23 on 30 Jun 2010).

Mr See expects the forex loss to be reversed in the coming quarter now that the Euro is recovering. It was US$1.32 as at 4 Aug.

Otto has been aggressive in expanding its new ‘special offshore services”.

Its flurry of corporate action for the new segment just last month alone includes the following:

On 2 Jun, Otto increased its stake in its seismic vessel-operating subsidiary, Reflect Geophysical, by 7.6% to 81.6%.

Reflect Geophysical was recently awarded a seismic data acquisition contract worth at least US$8 million from Anardarko Petroleum.

The customer is one of the largest independent oil and natural gas exploration and production companies in the world.

On 25 Jun, it took a 19.2% stake in US-based SURF Subsea, which recently procured from a liquidator a 292-feet Class 2 DP MSV worth US$55 million.

This vessel allows Otto to offer subsea and offshore construction work, in addition to its current seismic activities.

On 30 Jun, it took a 19.9% stake in Hako Offshore for S$4.8 million in cash.  Hako Offshore is integrated marine offshore services provider.

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