Doha: Gulf International Services (GIS or the Group), yesterday reported a net profit of QR168m for the six-month period ended 30 June 2022, with an earnings per share of QR0.0903.
Group’s revenue for the six-month period ended 30 June 2022 amounted to QR1.7bn, with an increase of 21 percent compared to the same period of last year. Revenue growth from the aviation, drilling and catering segments led to an overall increase in the Group revenue. This was partially offset by a negative growth noted in revenue from the insurance segment.
The Group reported an EBITDA of QR398m and recorded a net profit of QR168m for the six-month period ended 30 June 2022. Growth in Group revenues led to an overall increase in net earnings. On the other hand, the Group’s direct costs increased by 7 percent, mainly linked to increased commercial activity.
Group’s finance cost in first half increased by 7 percent to reach QR70m, against a backdrop of higher interest rates. General and administrative expenses also increased by 3 percent mainly attributable to the insurance segment. Foreign currency revaluation losses from GHC’s Turkish subsidiary also contributed negatively to the Group’s profitability.
Moreover, performance of the insurance segment investment portfolio was negatively impacted amid volatilities in capital markets, and a decline of QR17m (-68 percent) was noted on account of investment income versus 1H-21. This decline was mainly linked to the unrealized losses booked on revaluation of held for trading investment securities.
Revenue for 2Q-22 increased by 8 percent compared to 1Q-22, mainly on account of better revenue reported from the insurance, aviation and catering segments, which was slightly offset by negative movement in the topline from the drilling segment.
Net profit for 2Q-22 slightly increased by 1 percent compared to 1Q-22. Minimal growth in the Group net profit was reported as the negative movements in profitability from insurance, drilling and catering segments, predominantly offset the aviation segment’s continued growth in bottom-line profitability.
The Group total assets remained relatively flat during the reporting period compared to last year and stood at QR10.3bn as at 30 June 2022. Cash and short-term investments stood at QR815m, up by 17 percent compared to 31 December 2021.
Total debt at the Group level amounted to QR4.3bn as at 30 June 2022. Current levels of debt continue to weigh on the Group net earnings, as finance cost is one of the key cost element, and specifically limits the drilling segment ability to accomplish its desired profitability. GIS management is in continuous discussion with different key stakeholders to restructure the debt with an aim to provide greater flexibility to manage liquidity and ease pressure on the Group’s financial position.
The Drilling segment reported a revenue of QR632m for the six-month period ended 30 June 2022, up by 43 percent compared to 1H-21. The revenue growth has largely been linked to the new rig day-rates implemented for the offshore fleet since the mid of last year (July’21).
Also, redeployment of the two onshore suspended rigs (GDI-5 and GDI-7) during 3Q-21, positively contributed to the topline performance. Moreover, full deployment of Gulfdrill JV’s fleet during 2Q-21, had a positive impact on the segment revenue for 1H-22 on account of comparatively higher management fees.
The segment reported a net loss of QR23m for the six-month period ended 30 June 2022, compared to a net loss of QR132m for 1H-21. Reduction in losses was mainly attributed to growth in segmental revenue.
On a quarter-on-quarter basis, losses for the segment slightly increased by QR3m mainly due to slightly lesser revenues which declined by 3 percent versus 1Q-22.
The Aviation segment reported a total revenue of QR441m for the six-month period ended 30 June 2022, with an increase of 31 percent compared to 1H-21.
The increase was mainly attributed to higher flying activity recorded within both domestic and international operations, coupled with growth in revenue noted across all the operations, including MRO business and international locations; especially Turkey and Angola. The segment net profit reached QR163m, representing an increase of 47 percent compared to 1H-21, mainly on account of growth in revenue, despite the impacts of currency devaluation from Turkish subsidiary.
The segment revenue for 2Q-22 versus 1Q-22 increased by 14 percent, mainly due to continued improvement in domestic flying hours, higher revenue from the Turkish subsidiary and additional revenue from the Angola operations due to renewal of contract with better terms and an additional aircraft. Q2-22 profitability also increased by 7 percent mainly due to positive sequential revenue growth and slightly lower foreign currency revaluation losses from the Turkish subsidiary.
On the contrary, the segment net earnings increased by 7 percent as compared to 1H-21, to reach QR35m. The growth in bottom line profitability was mainly supported by an overall decline in claims, which decreased by 48 percent on a year-on-year basis. On the contrary, negative performance of the segment’s investment portfolio amid volatilities in capital markets weighed on the segment’s profitability. A decline of QR17m (-68 percent) noted on account of investment income for 1H-22 versus 1H-21.
The segment revenue for 2Q-22 versus 1Q-22 increased by 14 percent, mainly due to renewal of certain medical insurance contracts with better pricing terms and higher volumes. However, the segment profitability for 2Q-22 declined by 13 percent in comparison to 1Q-22, mainly due to significantly lesser investment income reported during 2Q-22 versus 1Q-22.
The catering segment reported a revenue of QR249m, an increase of 44 percent as compared to 1H-21. Revenue increase was mainly due to the growth in revenue within the manpower segment, on the back of realizations from a new contract won during last year. Additionally, certain contracts have been renewed within manpower segment, with broader scope improving overall service volumes for the segment. GIS will host an IR earnings call with investors to discuss its financial results, business outlook and other matters on Tuesday, 16 August 2022 at 1:30 p.m. Doha time.
In drilling segment, new contracts are won in KSA & Maldives for liftboats, building international footprints for the segment, while enhancing asset utilization, as both the liftboats remained operational throughout 2Q-22. This was in addition to continued positive impacts on the segment’s performance for 1H-22, from new rig day-rates for the offshore fleet applied starting from the mid of last year and redeployment of two previously suspended onshore rigs during 3Q-21. The segment had successfully renewed contracts for certain offshore rigs with an extended term ranging from 2 to 5 years, improving segment’s future financial position.
During 2Q-22, the segment successfully completed a largescale overhaul of an offshore rig. Such preventive maintenance overhauls are essential to ensure HSE standards, rig life, asset integrity and reliability with an intent to maintain long-term operational efficiency, leading to optimum utilization of assets.
Aviation segment continues to witness improved business performance with better flying activity within both domestic and international operations. Also, contributions from MRO & international business continue to support the segment performance.
During 2Q-22, international operations witnessed further growth from Angola’s contract revision with better terms on account of better asset utilization. An aircraft was mobilized to the Angolan fleet from the Qatari fleet to cover the additional flying hours as per the new contract. Also, another aircraft was mobilized to the Turkish fleet from Qatar to meet the upcoming increased demand from the market.
