From 31 vessels for charter mainly to the oil & gas industry as at end-1H2013, Swissco will have 38 by the end of this year and 43 in 2014. Photo: Company
SWISSCO HOLDINGS' core vessel chartering business was stable in 1Q and 2Q but its maritime services demonstrated lumpiness of revenue when it went from $20.4 million in 1H2012 to just $1.3 million a year later.
However, "maritime services" is expected to come back in a significant way as four vessels are expected to be completed and delivered in the second half of this year, compared to none in 1H2013.
The revenue recognised for this business segment includes the vessel value, for example, while the costs include the cost of vessel construction. All of these are recognised only on completion of the vessel.
(The maritime services segment requires some elaboration: Swissco manages the ship-building programmes -- including design -- of clients, and sources for marine and offshore equipment for offshore projects of its clients. It also provides supplies and consumables).
Charter revenue (above) in 1H2013 was stable. Charter rates were slightly better compared to the same period last year but utilisation rates dipped and Swissco had 1 vessel less to charter, said CFO Sam Kwai Hoong.Some key aspects of the 1H results, as highlighted at a results briefing yesterday by CFO Sam Kwai Hoong:
> Revenue fell 48.8% to $21.64 million.
> Net profit fell 41% to $3.9 million.
> Other income was boosted by the forfeiture of a $1.2 million deposit after a buyer failed to complete the purchase of a vessel.
> Gross margin from vessel chartering was about 30% while vessel utilisation rate was 65-70%.
> Finance costs dropped 22.3% from $1.4 million to $1.1 million as Swissco refinanced some loans. The average interest cost is 4%.
Swissco also has a ship repair and maintenance segment, which reported lower revenue of $1.6 million owing to fewer third-party vessels being serviced.
Its yard at Penjuru Lane, Singapore, which can carry out dry docking and afloat repairs on smaller- to mid-sized support vessels, also services its own fleet -- leading to faster turnaround times.
Big boost to charter fleet
Swissco Holdings CEO Alex Yeo (left) with CFO Sam Kwai Hoong. NextInsight file photoIn 2H2013, Swissco will take delivery of 7 new vessels, boosting its charter fleet from 31 to 38.
Among the 7 vessels are 4 anchor handling tug supply vessels (AHTS). (AHTS are mainly built to handle anchors for oil rigs, tow them to location, and anchor them up. They are also used to transport supplies to and from offshore drilling rigs.)
There will be two utility boats and one crew boat.
Charters for these 7 new vessels will be achieved only closer to delivery times or after delivery from late 3Q onwards. Reason: It is generally difficult to commit them to charters earlier as delivery times of the vessels by the yards may not be precise.
The impact of the new 7 vessels on Swissco's charter revenue will become significant from next year. Swissco’s vessels are focused on spot and short-term charters.
In the meantime, in 1H2013, payment for their construction has resulted in Swissco's cash falling from $35.1 million to $11.71 million between end-1H2012 and end-1H2013.
Swissco has another 5 new vessels, including 3 AHTS, scheduled to join its charter fleet in 2014.
The new AHTS are of higher specification, some ranging from 6400 to 7200 bhp with dynamic positioning 1 & 2 while the crew boats can transport up to 70 men, compared to 50 men on the present boats.
Its new accomodation vessels have a maximum capacity of 180 men, up from 120.
Even as it expands its charter fleet, Swissco can be expected to sell some of its older vessels as part of its ongoing renewal programme.
In 1H2013, it disposed three vessels and took delivery of one new crewboat.
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