While many companies in Southeast Asia would be disappointed at the paucity of rain, marine and subsea solutions company MMA Offshore (ASX: MRM) is nothing but grateful. The Company forecasts that its Earnings before Interest Tax Depreciation and Amortisation (EBITDA) for FY23 will fall within the range of $66 to $68 million, reflecting a substantial increase of over 100% compared to FY22.
MMA Offshore attributes this positive outlook to a stronger-than-expected second half, where less rain meant that a number of vessels remained active during the traditionally quieter Southeast Asian monsoon period. Despite the dry-docking of four vessels in the latter half of the year, MMA Offshore achieved solid fleet utilisation rates. Second-half vessel utilisation averaged 79%, up from 71% in H2 FY22, while full-year utilisation averaged 80%, up from 73% in FY2022.
MMA’s Managing Director, David Ross, said, “Strong activity across all our key markets is driving higher earnings and returns on our assets. The current recovery in oil and gas activity combined with growth in new offshore wind markets is presenting a unique opportunity for MMA to maximise the returns from our existing business whilst positioning the Company for growth into the future.
“MMA will deliver strong earnings growth for FY2023 and we expect the current positive market conditions to continue into FY2024.”
The Company’s utilisation rates have been bolstered by demand from both traditional oil and gas markets and the growing offshore wind sector. As the market tightens, MMA Offshore has been able to negotiate higher rates for its assets and services.
Its subsea division has also made a significant contribution to the Company’s overall performance. The division successfully completed several substantial integrated projects across oil and gas, offshore wind, and defence, utilising a combination of MMA Offshore’s own vessels and third-party assets.
In H1 FY23, the Company recorded revenue of $160 million, representing a 16.6% increase compared to the previous corresponding period. EBITDA amounted to $32.1 million, marking a significant growth of 124.5% compared to the first half of FY22. MMA Offshore generated a net profit after tax of $81.7 million, a substantial improvement from a net loss of $5.2 million during the first half of FY22. As of December 31, 2022, the Company’s cash at bank stood at $91.9 million, with debt amounting to $92.5 million, resulting in a net debt position of $0.6 million. MMA Offshore finished the half-year with net cash of $11.4 million.
MMA Offshore’s shift from being solely a vessel operator to a marine services provider with its subsea business has been instrumental in its financial performance. The subsea division has not only contributed to earnings during the first half but has also enhanced vessel utilisation. Plus, it gave the Company’s diversification strategy a leg up, enabling early access to the offshore wind and defence sectors.
The FY23 financial result is still subject to audit review with the full year results expected to be released on or about August 29, 2023.
Alinda is a Business Reporter for The Sentiment
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