Impairments drag Vallianz into red

Singapore’s Vallianz Holdings, a provider of offshore support vessels and  integrated marine solutions, recorded a net loss during FY2017 due to impairment charges. 

Vallianz on Monday reported its financial results for the 15 months ended March 31, 2017 (FY2017). The company’s financial year-end has been changed to March 31 from December 31 previously.

The company recorded an operating profit before tax of $20.3 million on revenue of $247.8 million in FY2017. Around 84% of the group’s revenue was generated by its vessel chartering and brokerage business which is buoyed primarily by long-term charter contracts in the Middle East.

According to the company, this contribution was higher compared to 64% for the 12 months ended December 31, 2015 (FY2015), which is in line with the group’s strategy to focus on its core vessel chartering and brokerage business.

As a result of the business slowdown in the offshore oil and gas industry, the company had to record non-cash net impairment expenses totaling $214.6 million, including impairment expenses of $22.3 million attributable to non-controlling interests, for certain of its assets in FY2017. These exceptional expenses caused the company to slip into the red in FY2017 with a net loss of $158.4 million.

Looking at the first quarter 2017 performance, the company’s revenues dropped by 21.5% to $38.7 million from $49.3 million in the first quarter 2016.

Ling Yong Wah, CEO of Vallianz, said: “The industry conditions continue to be extremely challenging amid intense competition in the offshore support vessel market. Although sluggish demand has placed significant pressure on vessel utilization and charter rates in most markets, Vallianz’s vessel chartering business remains operationally profitable. This is because most of our vessel charters are long term in nature and based primarily in the Middle East region where there are sustained oil production activities.”

At the end of March, the company’s order book was valued at approximately $1.03 billion, comprising mostly of long-term charters which include two-year extension options stretching up to 2025.