DOF Group (DOFG) Q2 2019 earnings summary

Executive summary

• Q2 management-reporting revenue was NOK 1,897m and EBITDA before hedge accounting was NOK 712m; fleet utilisation was 74% and backlog was NOK 20bn at 30 June.

• Second-half EBITDA was expected to exceed first-half performance, while weak IMR returns and unresolved long-term refinancing remained key challenges.

Financial highlights

• Management-reporting revenue rose to NOK 1,897m from NOK 1,838m YoY; EBITDA before hedge accounting increased to NOK 712m from NOK 594m, and EBITDA after hedge accounting was NOK 669m.

• Financial-reporting revenue was NOK 1,542m, EBITDA NOK 504m and EBIT NOK 84m; net loss was NOK 106m versus NOK 506m in Q2 2018.

• Operating cash flow was NOK 586m versus NOK 358m; management-reporting investments used NOK 237m and financing activities used NOK 476m.

• Q2 impairment was NOK 145m, with an additional NOK 9m recognised in joint ventures; the impairment mainly affected older vessels, including vessels in layup.

Outlook and guidance

• H2 2019 EBITDA was expected to exceed H1; 75% of the remaining 2019 backlog was secured, with higher utilisation supporting the outlook.

• Three RSVs began three-year Petrobras contracts after Q2, with estimated EBITDA contribution of $4.5m per vessel per year.

• Q3 IMR visibility was considered decent, with August and September expected to be acceptable; Q4 remained subject to the usual seasonal challenge.