Singapore: Kreuz Marks Tremendous Growth in 2011

Kreuz Holdings Limited, a subsea service provider for the oil and gas industry, reported that its profit attributable to owners of the company (“Net Profit”) for the full year ended December 31, 2011 (“FY2011”), more than tripled to US$26.6 million on the back of a 182% surge in revenue to US$153.8 million, as compared to the prior financial year ended December 31, 2010 (“FY2010”).

The increase in revenue for FY2011 was driven mainly by an increased number of subsea service projects performed by the Group. Revenue from both the Swiber Group and third party customers remained strong. Notably, revenue from third party customers stood at US$83.1 million, accounting for 54.0% of FY2011’s total revenue. This is the result of the Group’s efforts in bidding for third party projects after its IPO in July 2010.

Mr Kurush Contractor, Executive Director and CEO of Kreuz Holdings, said: “The offshore subsea sector has remained relatively buoyant despite challenging economic conditions in FY2011. Reflecting regional strength in the offshore oil and gas subsea business, we have grown tremendously in the past financial year and will continue our efforts towards securing new projects in-house with the Swiber Group as well as third party clients. Our capital expenditure shall continue to complement our growth thereby minimising reliance on outsourcing third party assets.”

“As we continue to seek new projects to grow our business, we remain committed to managing our costs effectively and optimising productivity. This aspect is important for retaining our edge in today’s competitive market. Our focus shall remain, without compromise on safe project execution, cost effective solutions, scheduled deliveries within budget and overall clients’ satisfaction.”

In line with revenue growth, cost of sales increased 211.9% to US$106.6 million for FY2011 compared to FY2010. This was primarily due to outsourcing and chartering expenses for third party assets. Notwithstanding higher costs, the Group maintained a healthy gross profit margin of 30.7% in FY2011. As the Group invested in its infrastructure to support business growth, administrative expenses increased 45.4% to US$11.6 million in FY2011 compared to FY2010.

Finance costs also increased 97.7% to US$965,000 in FY2011, due to loans obtained by the Group to finance the acquisition of its assets in 3QFY2010. Appreciation of the United States dollar against the Singapore dollar in FY2011 resulted in some favourable variances to our earnings.

Net profit for FY2011 more than tripled to US$26.6 million, as compared to US$7.5 million in FY2010.

The Group maintained a strong balance sheet with net asset value per share increasing from 16.67 US cents as at December 31, 2010 to 21.92 US cents as at December 31, 2011. Basic earnings per share increased from 1.62 US cents in FY2010 to 5.25 US cents in FY2011.

Strong Order Book

Current order book of approximately US$155 million, for works to be executed in Southeast Asia, East Asia and India, provides the Group with strong back-log until fresh awards can be materialised. The work scope of these projects, which include a mix of construction, installation and inspection related work, also feature hyperbaric welding that would differentiate the Group from other industry players.

Outlook

Supported by rising energy demand in Asia and a sustainable oil price level, exploration and production spending of oil majors will continue to remain robust, boosting demand for offshore subsea services.

“In line with an upbeat sector outlook, oil companies are exploring new oil fields to meet energy demand. Correspondingly, opportunities for installation work are expected to increase. The Group intends to compete actively to secure new contracts,” concluded Mr Kurush Contractor.

The Group continues to rely on its own assets and on short-term rentals from third parties for its current projects. To cater to the growth in its business, the Group will explore opportunities to acquire more assets.

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Subsea World News Staff , February 24, 2012;  Image: Kreuz