Release Date: August 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DOF Group ASA (STU:UV3, Financial) reported a strong EBITDA of USD 122 million for Q2 2024, reflecting consistent performance.
- The company achieved a record high order intake of over USD 1 billion in Q2, with an additional USD 400 million post-balance date.
- Fleet utilization stood at 89%, indicating high operational efficiency.
- The acquisition of Maersk Supply Service A/S is expected to enhance fleet capabilities and service offerings.
- DOF Group ASA (STU:UV3) has a robust backlog, providing revenue visibility and stability for the upcoming years.
Negative Points
- Lower performance in Brazil due to dockings and maintenance activities impacted overall results.
- The company faced a significant unrealized currency loss of USD 62 million, primarily due to the weakening of the Brazilian real.
- Norskan's performance was disappointing, affected by vessel off-hire and maintenance costs.
- Increased CapEx guidance from USD 90-100 million to USD 100-110 million due to new contract requirements.
- The company has yet to finalize plans for dividend payments, creating uncertainty for shareholders.
Q & A Highlights
Q: Do you expect to be in a position to pay dividends in 2025? And if so, in which quarter of 2025?
A: No, as Hilde said, we will talk more about that on September 10. We can't say yes or no today, but there is potential if we decide to do the refinancing. The refinancing has to be done by January '26, meaning it could be done in the second half of '25 or earlier. If so, we might be in a position to pay dividends in the spring of '25. The main restriction on paying dividends is due to the financing covenants on part of the fleet.
Q: Regarding the upcoming refinancing, what is your view on the appetite from banks?
A: (Hilde Dronen, CFO) We are not concerned about the refinancing at all. We see increased appetite from both existing and new banks due to better earnings and market conditions. The part of the group that refinanced long-term debt in Brazil will not be touched. The refinancing will mainly involve Dof Subsea and Dof Rederi, which have low gearing levels.
Q: Can you explain the unrealized currency effect for this quarter and how it impacts the balance and cash flow of the company?
A: (Hilde Dronen, CFO) The unrealized currency effect does not impact cash flow or the balance sheet, only the P&L. USD58 million of the USD62 million comes from our Brazilian activity, where we use Brazilian reals as the functional currency. The Brazilian reals have weakened significantly against the US dollar, causing this P&L effect. However, it reverses in other comprehensive income, so equity and debt are not impacted.
Q: Will you consider selling non-core segments, especially in light of the MSS transaction once it is complete?
A: Yes, we will continue to sell non-core assets and even core assets if the price is good enough. This is part of our business strategy.
Q: How much of your available vessel days excluding MSS is currently open for 2025 and 2026?
A: For 2025, we have a backlog of between USD1 billion and USD1.1 billion, representing 70% to 75% of our capacity. This means 25% to 30% of our capacity is available. For 2026, we have a backlog of USD650 million to USD700 million, covering close to 50% of our capacity.
Q: Is it common for the industry to take vessels on long-term contracts one to two years into the future, or is this a reflection of the current market?
A: It reflects both the market and the charters' belief that the market will last long. Clients are moving from one-year contracts to longer terms, and owners are reluctant to go long on low rates. This trend is more common for subsea vessels than for PSVs.
Q: Can you update on the contract backlog in the PSV segment and your near-term exposure in light of the softness in the North Sea?
A: We have two boats up for renewal in October. One is expected to be taken due to below-market options, and we are in tight dialogue for a new contract for the other. We do not see the North Sea spot market weakness affecting us significantly.
Q: Are you able to share anything on planned dividends in the DOFCON subsidiary joint venture with Technip?
A: We will discuss this with our partners in two weeks. While I can't comment on numbers now, there is room for good dividends from DOFCON. We might provide more details at the Capital Market Day.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
