First Quarter Net Profit Slides 2% at Ezion Holdings Limited

EzionEzion Holdings (SGX: 5ME) specialises in the development, ownership and chartering of strategic offshore assets and the provision of offshore marine logistics and support services to the offshore oil and gas industries. It posted its first quarter results on Wednesday.

Revenue surged 72% year-on-year to US$94.4 million, up from US$54.8 million last year, primarily due to the chartering contribution from the deployment of additional units of service rigs. Gross profit margin for the quarter was at 50%, an improvement from 44.9% seen last year, due to better cost controls.

Net profit, however, dipped from US$46.2 million to US$45.2 million because of the absence of “one-off gain from disposal of a jointly controlled entity recognised” in first quarter last year. Excluding the gain from the disposal, net profit would have increased by US$17.4 million or 62%.

As of 31March this year, total borrowings at the shipping firm stood at US$1.3 billion while the cash balance was at US$185.4 million.

For the quarter, it generated an operating cash flow of US$26.7 million, as compared to US$29.4 million last year. It had spent US$48.5 million on capital expenditure this year to purchase and refurbish service rigs. Last year, capital expenditures came up to US$239.3 million. Even though free cash flow improved this quarter, it was still in the negative territory, which is a cause for concern.

Going forward, Ezion said it will continue to focus on investment in service rigs to meet strong demand. Its shares closed at S$2.25 on Wednesday, translating to a historical PE ratio of 15.