Ezion reports 1Q19 loss after tax narrowed as operating expenses fell

Ezion Holdings reported Wednesday its first quarter loss after tax narrowed to US$12.85 million from a US$40.37 million loss in the year-ago period, amid lower expenses.

Revenue for the quarter ended 31 March fell 25.8 percent on-year to US$28.0 million, Ezion said in a filing to SGX after the market close.

The revenue decline was on a drop in utilization rates of liftboats amid continued delays in re-deploying the group’s assets on working capital constraints as the company awaits the finalization of additional revolving credit facilities, the filing said.

In addition, Ezion said it faced a systematic problem as shipyards, equipment suppliers and service providers used by the company were hit by a credit crunch.

“The tighter credit terms imposed by these vendors coupled with the inability of the group to draw down the required funds from its secured lenders has severely affected the group’s ability to operate, maintain and deploy its vessels,” Ezion said.

The company also said its fleet of vessels was seeing an overall reduction in charter rates.

Other operating expenses dropped 91.7 percent on-year to US$2.62 million, mainly on lower foreign-exchange losses and the absence of year-earlier restructuring costs, Ezion said.

Finance costs jumped 58.4 percent on-year to US$12.61 million, mainly on the US$3.3 million amortization of the fair value recognized on debt securities and term loans during the period, it said.

Ezion issued a downbeat outlook.

“There has not been any significant improvement in the overall market conditions for the offshore oil and gas industries,” the company said. “The continued uncertainty in the oil prices that has affected the group’s clients coupled with the persistent oversupply of certain marine assets like tugs, barges, workboats and jack ups continues to present challenges.”

Ezion added that the availability of funds from its lenders was “crucial” to its ability to put its assets into deployment.

“Management is still working intimately with the secured lenders on the disbursement of the required funds. In addition, the group has
entered into agreement with Yinson to be the group’s strategic investor, subject to certain conditions to be met,” Ezion said.


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