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What Investors Need To Know About PACC Offshore Services Holdings’ Latest First Quarter Earnings

As one of Singapore’s newest publicly-listed entities (the company got listed only last month), PACC Offshore Services Holdings (SGX: U6C) has just handed in its first quarterly report card on Tuesday.

The company, commonly known as POSH, is currently one of Asia’s largest operators of offshore oil & gas support vessels. It counts companies like Ezra Holdings (SGX: 5DN) and Ezion Holdings (SGX: 5ME) as its competitors.

How did the company fare?

For the quarter ended 31 March 2014 (this happens to be the first quarter for POSH’s financial year as well), the company saw a 6% year-on-year decline in revenue to US$52.9 million. Fortunately, due to a much higher gross margin (an improvement from 21.8% to 29.9%), the company’s gross profit actually grew 28% year on year to US$15.8 million.

Elsewhere on the income statement, the most interesting figure that jumps up is the “other operating income” line that came in at US$35.8 million for the quarter; that’s more than double that of last year. Turns out, POSH had recorded a gain of US$32.6 million on the sale of five vessels to a joint venture outfit. This income helped push POSH’s overall net profit to US$36.7 million for the quarter, up 76% year-on-year.

The company’s balance sheet as of 31 March 2014 appeared to be quite stretched as the figures were tabulated before its initial public offering. POSH ended the quarter with a net gearing ratio (net debt divided by total equity) of 88% with a cash balance and total debt load of US$12.3 million and US$810.6 million respectively.

What’s next?

As the company now operates more than 110 vessels either directly or indirectly through its joint ventures, it will be trying to restructure its fleet by selling older vessels and upgrading others in order to remain competitive in the market. Furthermore, the company has also expanded its business interests with a venture into the deep-water offshore accommodation market. POSH has a semi-submersible accommodation vessel, currently under construction, that it would be chartering to Petrobas for a year under a US$80.5 million contract that begins in December this year.

Foolish Summary

POSH is currently trading at S$1.175 per share, giving the company a market capitalisation of S$1.7 billion. No dividend was declared for the quarter.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.