KUALA LUMPUR (May 27): Offshore support vessel (OSV) provider Icon Offshore Bhd has announced a second consecutive losing quarter, with a net loss of RM5.01 million or 0.4 sen per share for the three months ended March 31, 2016 (1QFY16), as revenue came in 18.5% lower, year-on-year (y-o-y), at RM51.8 million.

In the preceding quarter, it recorded a net loss of RM376.89 million, largely due to impairment of goodwill and vessels which amounted to RM376 million, on the back of RM65.34 million in revenue.

In the corresponding period a year ago, it reported a net profit of RM2.71 million or 0.2 sen per share, with a revenue of RM63.59 million, its bourse filing yesterday showed. 

The y-o-y decline in its latest quarterly revenue was primarily due to lower fleet utilisation rate of 45% for the quarter, as compared to 63.8% a year ago, due to the completion of several long-term contracts, vessels being laid-up, as well as continuous low activities in the oil and gas (O&G) industry.

"Further, reduction in daily charter rates for several existing contracts and new contracts affected the revenue. However, this was partly offset by contribution from a new accommodation work boat vessel in the current quarter under review," it noted.

Cost of sales declined 11.6% to RM35.8 million, primarily due to cost saving initiatives in relation to fuel consumption monitoring, vessels laid-up, domestic safe manning, vessels hot stacked, and lower depreciation for vessels subsequent to the impairment of vessels as at Dec 31, 2015.

Moving forward, Icon Offshore said upstream exploration and production activities in Malaysia should continue to underpin the demand for OSV.

"Despite the fact that oil price have been improving over the period under review, the activities level of oil and gas industry remains lagging. The market condition for OSV remains highly challenging which has largely impacted the OSV operators," it added. 

While the industry outlook is expected to remain soft, Icon Offshore said it will focus on ensuring its utilisation rate is maximised through competitive tendering for domestic and regional contracts, and leveraging on its expanded presence in Brunei, as it continues to optimise cost.

“The drop in revenue and profits reflects the challenging business environment that is affecting all industry players, with significant downward pressure on vessel charter and utilisation rates," said Icon Offshore managing director Amir Hamzah Azizan in a statement. 

"As a result of weak oil prices and the lack of development activities by the O&G majors, the market condition for the OSV sector remains highly challenging which has adversely impacted all OSV operators. Nonetheless, we are optimistic that the recent improvement in global oil prices will inevitably serve as a catalyst to restart offshore development activities, thereby bringing much needed demand for support services players,” he added.

The group remains relatively cautious on its financial results for the remainder of FY16.

Icon Offshore closed up one sen or 2.7% at 38 sen yesterday, for a market value of RM447.33 million.