Norwegian shipping company Farstad Shipping increased its profit during the first quarter of the year helped by one-off gains despite decrease in revenues amid challenging market.
In its 1Q 2017 report on Tuesday, Farstad Shipping posted an operating income of NOK 495.6 million for the first quarter 2017, compared to NOK 827.2 million for the same period in 2016. According to the shipping company, the reduced operating income was a result of the challenging market situation.
The operating costs for the period were NOK 821.3 million versus NOK 569.6 million in the prior-year first quarter.
Profit after taxes was NOK 1.1 billion ($130.5 million) following a one-off accounting effect related to the financial restructuring of the company whereby NOK 1.74 billion has been recognized as financial income. This is an increase compared to NOK 94.2 million profit in the first quarter 2016.
During the quarter, the company had 14 vessels in lay-up, fully or partly.
The contract coverage of the Farstad fleet is approx. 44% for the remaining part of 2017, 39% excluding options, and approx. 36% for 2018, 20% excl. options. Total backlog exclusive options is approx. NOK 3.3 billion.
Market ‘out of balance’
A substantial part of the OSV world fleet continues to be laid up, and the market continues to be out of balance due to substantial excess vessel capacity still trading, the company said in the report on Tuesday.
The company concluded that, so far, the positive sentiment in the oil-market has not impacted the size and scope of overall offshore activity. Despite a projected seasonal upturn in the North Sea, the short-term outlook for the OSV fleet continues to be adversely affected, with both historical low market rates and fleet utilization continuing in the near term.
Farstad’s pending merger with Solstad Offshore and Deep Sea Supply is expected to become effective in June. The new company will have a fleet of over 150 vessels and 3,000 employees.
Offshore Energy Today Staff