MMA profit falls in tough market

MMA Offshore has reported a dramatic slide in half-year profit as the marine services company faces challenging conditions in the offshore oil and gas industry.

Perth-based MMA announced today a 82.8 per cent fall in net profit to $6.5 million for the six months to December, with revenue down 32.2 per cent to $309.3 million.

Its earnings before interest, tax, depreciation and amortisation fell 49.8 per cent to $66.3 million, while earnings per share fell 83.5 per cent to 1.7 cents.

Chairman Tony J Howarth said the result was disappointing but in line with expectations given the current market conditions, but the company had decided to suspend dividend payments in order to retain cash.

““In the current environment, MMA is focused on improving the business through areas that it can control such as reducing costs, increasing productivity and improving our operating performance,” Mr Howarth said.

“We believe that such actions will position the company well to navigate through the current market downturn.

“We are also strongly focused on our asset sales programme to reduce debt.

“Whilst there is no doubt that the company is facing difficult conditions at present, MMA is backed by quality assets and has a strong operating track record which I believe will stand us in good stead whilst we navigate through this difficult period.”

MMA managing director Jeff Weber said the group’s Australian vessels business performed slightly better than expected, with ongoing construction on LNG projects generating work for some of MMA’s vessels.

“The international market for offshore vessels remains very difficult with large numbers of vessels competing for limited work,” Mr Weber said.

“Maintaining utilisation remains challenging and rates have now come down by up to 50 per cent in some markets.

“The Middle East is holding up slightly better in terms of utilisation and MMA is focused on growing its operations in this region.”

Mr Weber said MMA’s Dampier Supply Base generated stable returns, driven mostly by construction and production support activity in the region, however that activity is expected to reduce in the second-half of the financial year when the Chevron-operated Gorgon LNG project is completed.

“Our current focus is on streamlining the business, selling assets and reducing our debt,” he said.

“Our newbuild program is close to completion and we expect capital expenditure in FY17 to be minimal.

“At this stage, we anticipate market conditions will remain challenging for the remainder of FY16 and into FY17.

“We expect second half earnings to be significantly lower than the first half as a result of reduced Australian construction activity, the seasonal impact of the South East Asian monsoon period and ongoing depressed market conditions.”

MMA shares were 8.4 per cent lower to 30.2 cents each at 10:15am.