bourbon orca

Higher Day Rates Boost Earnings 27 Percent at Bourbon, Massive Fleet Expansion in Progress

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August 29, 2012
bourbon orca
Bourbon SA, owner of the biggest fleet of supply and crew ships for the oil industry, swung to a profit in the first half and said an increase in vessel rental rates was supporting growth.

Net income of 17 million euros ($21 million) compared with a loss of 21.4 million euros a year earlier, the Paris-based company said today in a statement.

Earnings before interest, taxes, depreciation and amortization climbed 27 percent to 180.8 million euros with the addition of 22 new vessels, higher prices and a stronger dollar.

“The positive impact of the increase in average daily rates applies to an expanding fleet,” Chief Executive Officer Christian Lefevre said in the statement. The company has slowed commissioning of new vessels and is cutting costs, he said.

Bourbon had forecast demand for vessels and rental rates would improve this year to service a growing number of rigs, platforms and well heads. The company bolstered its ship- building program last year in anticipation that explorers would choose new vessels.

Under a $2 billion expansion plan, Bourbon plans to own 600 ships by 2015, up from 437 at the end of last year. Net debt rose to 2.05 billion euros from 1.96 billion euros at the end of last year with 422 million euros in net new financing to be drawn down by the end of the month, the company said today.

Financing Options

The shipowner has sought diversification of financing away from French banks and could obtain about 25 percent of its needs from the financial market by 2015 compared with none today.

“We are opening our eyes and realizing that our financing is changing and exclusively using banks for companies of our size, which was the norm in Europe, is changing,” Laurent Renard, chief financial officer, said today. “We want to diversify our financing. We will do a market operation at an opportune moment.”

About two-thirds of the investment plan has been carried out with 500 million euros remaining to be spent, Lefevre said.

“We will revisit the opportunity to do this part in the first quarter 2013,” he said. “If we decide to order these vessels we will still be able to have them by the end of 2014.”

The company reported today average daily rates for vessels, excluding crewboats, of $18,352 during the first half compared with $17,451 a year ago and $18,000 in the last six months of 2011.

Delivery Delay

“Orders for drilling rigs due to be commissioned in the next few years and the order books of offshore construction companies are set to stimulate demand for vessels,” according to today’s statement. “Demand for offshore service vessels is predicted to increase over the next two years.”

The vessel utilization rate may improve next year, Lefevre said.

Typhoon Haikui, which hit China earlier this month, delayed the delivery schedule of 15 vessels at Sinopacific’s shipyards in Zhejiang by five to six months, Bourbon said. It had 445 vessels in operation at the end of June and 96 on order, according to a presentation.

– Tara Patel, Copyright 2012 Bloomberg
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