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Swire Pacific’s marine division braces for $129m loss in 2015

Swire Pacific’s marine division braces for $129m loss in 2015
Swire Pacific Limited warned of a HKD1bn ($129m) loss in 2015 for its marine services division due to the adverse operating conditions in the offshore oil exploration market.

The projected loss will compare to a profit of HKD1.1bn in 2014, according to a statement issued by Swire Pacific Limited.

Swire Pacific noted that oil prices have declined substantially in the second half of 2014 and have remained low since then, adversely affecting the offshore oil exploration market.

Apart from oil majors and national oil firms cutting back on their E&P plans, projects have been delayed or abandoned.

“All this, and an oversupply of tonnage seeking work in this weak market, has adversely affected the business of Swire Pacific Offshore (SPO). The business started to make losses in the first half of 2015, when results were also adversely affected by an impairment charge arising from cancellation of contracts with a Brazilian shipyard for the construction of four PSVs,” Swire Pacific said.

SPO’s loss in the first half of 2015 was HKD169m while the marine services division as a whole made a loss of HKD156m in the period.

Swire Pacific added that due to the gloomy outlook of the offshore oil services industry and assumring oil prices will not recover for some time, it concluded that the book value of SPO’s fleet will be subject to “significant impairment charges.”

“The trading outlook for the remainder of 2015 has also deteriorated more than was expected in August and further impairment charges are expected arising from cancellation of the shipbuilding contracts,” it said.

TAGS: Offshore