DOF Group (DOFG) Q1 2020 earnings summary

Executive summary

• Management-reporting EBITDA was NOK 804m, the strongest first quarter since 2015, with average fleet utilisation of 81%.

• COVID-19 and the oil-price collapse drove impairments and currency losses, resulting in a NOK 4,116m net loss and negative equity of NOK 245m.

• Contract disruption and weak market conditions heightened liquidity and refinancing risks; long-term financing remained unresolved.

Financial highlights

• Management-reporting EBITDA was NOK 804m vs NOK 541m before hedge accounting (NOK 496m on the reported comparison); IFRS EBITDA was NOK 488m vs NOK 331m.

• IFRS operating income was NOK 1,708m vs NOK 1,358m; EBIT was negative NOK 1,099m vs positive NOK 34m.

• Net loss was NOK 4,116m vs NOK 133m; Q1 currency and derivative losses were NOK 2,878m.

• Management-reporting impairments totaled NOK 1,532m; IFRS impairment was NOK 1,346m.

• Operating cash flow was NOK 440m vs NOK 43m; investing outflow was NOK 86m vs NOK 902m.

Outlook and guidance

• Operational EBITDA was expected to fall sharply over the rest of 2020 as COVID-19 and low oil prices weighed on activity.

• Contract coverage was 69% for Q2, 51% for Q3 and 50% for the next 12 months.

• Market recovery, future earnings and asset values remained highly uncertain, with further impairment possible.

• Strategy focused on term contracts, fleet utilisation and adapting costs and capacity; 18 vessels were laid up by end-May.