DOF Group (DOFG) Q3 2019 earnings summary

Executive summary

• Management-reporting EBITDA excluding hedge accounting was NOK 803m, the strongest since Q2 2016; fleet utilisation averaged 82%.

• Earnings and utilisation improved across all three segments, though continued rate pressure and high impairments weighed on results.

• IFRS net loss was NOK 2,130m; backlog was NOK 20bn at 30 September, while long-term refinancing remained uncertain.

Financial highlights

• Management-reporting revenue was NOK 2,057m and EBITDA NOK 759m; EBITDA excluding hedge accounting was NOK 803m.

• IFRS Q3 revenue was NOK 1,752m, up 15% YoY; EBITDA was NOK 461m vs NOK 407m, and EBIT was NOK -547m vs NOK 31m.

• IFRS net loss was NOK 2,130m vs NOK 269m; impairment and unrealised currency and financial-instrument losses drove the result.

• Operating cash flow was NOK 386m in management reporting; IFRS cash flow after interest and taxes was NOK 219m.

• Management-reporting investments were NOK 95m and financing cash flow an outflow of NOK 341m; IFRS investing and financing cash flows were NOK 130m and NOK -472m.

Outlook and guidance

• Q4 operational EBITDA was expected to be lower than Q3; FY 2019 was expected to be substantially better than 2018.

• Backlog coverage was 81% for Q4, 67% for Q1 and 61% for the next 12 months; total backlog was NOK 20bn.

• Winter-season rate and utilisation pressure was expected across PSV, AHTS and subsea IMR fleets; Brazil was expected to remain weak over the next 12 months.

• Management and the Board believed a long-term financial solution was obtainable before year-end, but completion was not assured.