Singapore: Otto Marine Reports 36% Revenue Growth in 2010

Otto Marine Limited, (“Otto Marine” or the “Group”), a leading offshore marine company which specializes in building complex offshore support vessels, ship chartering and offers specialized offshore services, today  reported its financial results for the twelve/ three months ended 31 December 2010 (“FY2010/ 4Q2010”).

Overall, the revenue of the Group increased by over 36% to S$579.9 million for FY2010. However, net profit attributable to shareholders (PATMI) was negatively impacted by the following one-off items with an aggregate value of S$46 million:-

• Net foreign exchange (“FX”) loss of S$22.4 million, the majority of which was attributable to unrealized mark to market losses due to the weakening of the Euro against the USD and the USD against the SGD. For the first half of 2010, the Group recorded a net FX loss of S$24.8 million;
• S$23.6 million due to the reversal of profits recognized for the terminated sale contracts for vessels sold to a customer and an associate;

Had the Group not been impacted by these one-off items, PATMI for 2010 would have been 113.3% higher at S$86.6 million. The Group has begun to benefit from its strategy of growing its contribution from chartering,

leasing and specialized offshore services. For FY2010, the aggregate gross profit from these segments was S$33.7 million representing an almost three-fold increase from that of FY2009. In addition, as a proportion of total gross profit, these activities represented 40% of the whole year result in FY2010 when compared to 15% in FY2009.

The shipbuilding, ship repair and conversion segment registered a 19% increase in revenue to S$478.6 million for FY2010 due to higher revenue recognition based on percentage completion method.

Due to increased fleet size in 2010, the chartering segment registered an increase of 46% in revenue to S$16.7 million and an increase of 57% in gross profit to S$8.6 million for FY2010.

The leasing business that commenced only in 2Q2009, registered revenue and gross profit of S$21.9 million and S$21.8 million respectively for FY2010.

The Geophysical segment (basically the business of subsidiary, Reflect), that commenced in 4Q2009, registered revenue and gross profit of S$60.3 million and S$6.4 million respectively for FY2010. Up to the first half of 2010, this segment contributed a gross profit of S$5.7 million. However, for the second half of 2010, the contribution from this segment was only S$0.7 million due to mobilization expenses on one vessel and another vessel being dry docked in 4Q2010.

The operating expenses for the Group more than doubled from S$24.4 million in FY2009 to S$63.8 million in FY2010. This was mainly due to increase in foreign exchange loss (S$22.4 million) and increased staff costs due to fleet expansion and new businesses. Consequently, the Group’s net profit attributable to shareholders declined 22% to S$40.7 million for FY2010.

“In 2010, we were impacted by one-off events. Notwithstanding this, the Group maintains its strategy of building sophisticated offshore vessels while at the same time increasing contributions from chartering and  specialized offshore services. We are pleased with the full year contribution from our seismic business under Reflect. Our subsea business just started recently and we look forward to it performing better in 2011.

We made further progress in developing our overseas network to strengthen our chartering business in key markets. Starting this month, February 2011, we partnered Australia-based Go Marine to target the robust Australian oil and gas market.” Mr Lee Kok Wah, President cum Group Chief Executive Officer

Outlook

Building a strong chartering platform has always been on Otto Marine’s agenda and this is now made possible with the enlarged fleet and the strategic combination with Australian company, Go Marine Group Pty Ltd (“Go Marine”). The Group announced their tie-up deal with Go Marine, recognized as one of the largest marine services company in Australia, on 1 February 2011 and highlighted that this synergistic acquisition provided Otto Marine with an excellent platform to enter into the booming Australian market where major projects such Gorgon, Wheatstone and Browse Basin are located.

In terms of new orders and contracts, Otto has secured new orders worth approximately US$83 million for three vessels for the shipbuilding division in FY2010. Also, Otto has secured new orders worth approximately US$67 million for eleven contracts for the geophysical division in FY2010

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Source:Otto Marine, February  18, 2011