Impairments Plunge Maersk Supply Service into Red
Offshore marine contractor Maersk Supply Service has recorded a loss (continuing operations) of USD 1.2 billion in 2016 against profit of USD 147 million in 2015.
The underlying loss was USD 44 million, versus profit of USD 117 million for the year 2015.
The result was impacted by an impairment of USD 1.2 billion due to oversupply and reduced long-term demand expectations as a consequence of lower offshore spending, the Group said in its annual report.
Revenue decreased to USD 386 million, compared to USD 613 million in 2015, on lower rates and lower utilisation as well as fewer vessel days available due to divestments and lay-ups.
The lower revenue was partly offset by cost reductions with total operating costs at USD 282 million (USD 345 million in 2015). Maersk Supply Service reduced the daily running costs by 11% compared to 2015 on a like-for-like basis in 2016.
Cash flow from operating activities decreased to USD 81 million (USD 250 million) primarily caused by a lower result. Cash flow used for capital expenditure decreased to USD 103 million (USD 206 million).
During 2016, Maersk Supply Service divested ten vessels, thereby reducing its fleet to 47 vessels by the end of 2016. The company is planning to reduce its fleet by an additional 11 vessels over the course of the next 15 months.
As a consequence of the fleet reduction and the flagging of existing project vessels to the Isle of Man registry, the Maersk Supply Service crew pool and the onshore organisation were reduced. A total of 325 offshore employees and 43 headquarter positions were made redundant.
Maersk Supply Service was awarded two decommissioning contracts for the Janice subsea field and the Leadon subsea field with Maersk Oil in 2016. The decommissioning work will utilise up to 15 of the company’s vessels in 2017, including one of the Stingray SSV newbuildings and one of the Starfish Anchor Handling Tug Supply (AHTS) newbuildings.