DOF Group (DOFG) Q2 2020 earnings summary

Executive summary

• COVID-19 and weak offshore markets disrupted operations through postponed or cancelled work, contract terminations and crew-change challenges; 17 vessels were laid up by August.

• Management-reporting Q2 EBITDA was NOK 701 million; fleet utilization was 67%. Negative equity and debt restructuring made liquidity and refinancing central concerns.

Financial highlights

• Management-reporting Q2 EBITDA was NOK 701 million vs NOK 712 million in Q2 2019; IFRS EBITDA was NOK 376 million vs NOK 504 million.

• Q2 management-reporting impairments were NOK 779 million; IFRS impairments were NOK 588 million. Management-reporting YTD impairments reached NOK 2,311 million.

• IFRS Q2 net loss was NOK 675 million; H1 IFRS net loss was NOK 4,791 million, including NOK 2,718 million of currency losses on debt and instruments.

• H1 management-reporting EBITDA was NOK 1.5 billion; operating loss was NOK 1.389 billion and net loss before unrealized currency effects was NOK 2.4 billion.

• IFRS Q2 operating revenue was NOK 1,455 million vs NOK 1,542 million YoY; management-reporting operating income was NOK 1,802 million vs NOK 1,897 million.

Outlook and guidance

• H2 backlog was NOK 3.3 billion; contract coverage was 65% for Q3 and 47% for the next 12 months.

• Q3 operational EBITDA was expected to be in line with Q2, with high uncertainty; Brazil activity was expected to improve in H2.

• COVID-19 and lower oil prices were expected to pressure markets and rates through 2020 and into 2021.

• Management planned to prioritize term contracts, maximize utilization, reduce costs and adjust capacity; timing of market recovery remained uncertain.