DOF Subsea has reported loss in Q1 2020 of NOK 1.5 billion, against NOK 25 million in Q1 2019.
Earnings hit was due to depreciation and impairment of NOK 976 million.
This was because of the weakening market for vessel services and the low demand visibility for services going forward.
DOF Subsea also booked a net financial loss of NOK 1.3 billion due to the weakening of NOK against USD.
Of that loss, NOK 815 million goes to unrealized currency loss on loan in USD, outstanding FX derivatives and Interest rates.
In addition, an impairment on the joint venture vessel Skandi Niteroi of NOK 55 million has been recognised.
Dof Subsea generated operating revenue of NOK 997 million, against NOK 844 million same time last year.
Operating profit before depreciation and impairment (EBITDA) was NOK 391 million, versus NOK 226 million in 2019.
The operating profit after depreciation and impairment (EBIT) was negative NOK 585 million.
The average vessel utilisation in the Subsea/IMR projects segment was 73 per cent for the quarter.
The utilisation of the vessels within long-term charter segment was 82 per cent. For the fleet in total, the utilisation was 76 per cent.
Outlook and Backlog
The impact of the covid-19 virus and oil price drop have disrupted the Group’s operations and earnings going forward.
The market conditions have become more challenging with oversupply of services and subsea vessels.
As a consequence of the uncertainties caused by the recent events DOF Subsea has entered into a standstill agreement with majority of its secured lenders and its bondholders.
The number of subsea employees ate the end of Q1 2020 was 1,179, and the Group’s fleet comprised of 24 owned vessels, 3 chartered-in vessels and 71 ROVs.
At the end of first quarter, the firm contract backlog amounted to NOK 13.8 billion.
However, “the uncertain situation in the subsea market is challenging where several client are trying to renegotiate contract terms,” the company said.