Ezion Holdings has reported a 69.1 per cent drop in third-quarter net profit to US$9.4 million (S$13.2 million).
Revenue for the three months to Sept 30 fell by 7.4 per cent to US$79.8 million. This was mainly due to modifications on a few jack-up rigs, lower charter rates and the postponement of the start of a customer's project which resulted in the delay of the deployment of several of the group's service rigs.
Cost of sales and servicing, meanwhile, increased by 7.4 per cent to US$65.8 million, due to the deployment of additional service rigs.
Consequently, gross profit fell 43.9 per cent to US$14 million.
Earnings per share slumped to 0.39 US cent from 1.69 US cents previously while net asset value per share shrank to 66.7 US cents compared with 77.5 US cents as at Dec 31.
AT A GLANCE
NET PROFIT: US$9.4 million (-69.1%)
REVENUE: US$79.8 million (-7.4%)
Ezion expects the challenges facing the marine and offshore oil and gas industry to continue at least into next year.
The group's net cash used in investing activities was US$38.9 million, mainly due to the deployment of funds towards the refurbishment and modifications of the group's service rigs, an investment in a joint venture and an additional investment in an associate.
Net cash used in financing activities was US$45 million, mainly due to repayment of bank borrowings during the period, offset by net proceeds received from the rights issue of ordinary shares and additional loan drawdown.
While conditions remain tough, there are some opportunities for the group to explore.
"Some of Ezion's customers in the offshore industry are very much focused on production and extraction activities, and at current oil prices, we are seeing pockets of renewed optimism that is translating into inquiries and requirements for additional service rigs," said Ezion.
"Some of the company's other customers in the offshore windfarm segment are similarly pushing ahead on various field developments, and will therefore also require supporting service rigs."
Ezion said it is working hard on meeting the operating requirements of these clients for next year and beyond. These will involve modifying a few more of its existing service rigs and also taking delivery of up to two or three new units before the end of next year.
To manage gearing and cash flow while supporting these projects, it hopes to sell at least one service rig. It is also looking for mutual agreements with a few of its various stakeholders on the possible delay or cancellation of a few of its past committed projects that no longer make economic sense.
It is also inviting potential joint venture partners to co-own some of the group's assets.
Ezion said it has in place contingency plans to deal with the possibly worsening situation caused by severe financial difficulties faced by its joint venture partners. As a result, it does not expect to be materially affected.
Ezion shares yesterday ended two cents, or 6.5 per cent higher, at 33 cents.