DOF Group (DOFG) Q1 2019 earnings summary

Executive summary

• Management-reporting EBITDA before hedge accounting was NOK 541m vs NOK 520m; financial-reporting EBITDA was NOK 331m vs NOK 378m, with a NOK 133m net loss.

• Fleet utilisation was 70% and backlog was NOK 20bn at 31 March; all newbuilds had been delivered and were on contract.

• PSV conditions improved, while AHTS and subsea IMR remained challenging; refinancing pressures raised liquidity and covenant risks.

Financial highlights

• Financial-reporting revenue was NOK 1,358m, down 8% YoY; EBITDA was NOK 331m vs NOK 378m, and EBIT was NOK 34m vs NOK -46m.

• Management-reporting EBITDA before hedge accounting was NOK 541m vs NOK 520m; after hedge accounting it was NOK 496m vs NOK 479m.

• Net loss was NOK 133m vs NOK 47m profit; net financial costs were NOK 163m vs net financial income of NOK 88m.

• Operating cash flow was NOK 43m vs NOK 207m under management reporting; investments were NOK 902m vs NOK 117m, mainly reflecting a newbuild delivery.

Outlook and guidance

• 2019 operational EBITDA was expected to be slightly higher than 2018, with 64% of the remainder-of-year activity covered by backlog.

• Q2 EBITDA was expected to exceed Q1 as new PSV contracts ramped up; PSV earnings were expected to improve gradually.

• AHTS and subsea IMR earnings and utilisation remained uncertain; strategy focused on term contracts and maximising firm fleet employment.

• Prolonged weak markets could reduce utilisation and earnings, increase liquidity risk and require requests for softer loan terms.