It's bad whichever way you look at it. Adjusted gross profits are down 61 per cent at Gulf Marine Services (GMS) at the half-year mark, on underlying margins down 16 percentage points. The cause: a precipitous decline in utilisation rates for the company’s self-propelled, self-elevating support vessels (SESV) – down to 56 per cent from 89 per cent in the comparable period in 2016, together with a slump in average charter day rates on certain contracts. The effect: a cancellation of the half-year dividend with the emphasis switched to paying down bank debt.
On that score, GMS has amended certain covenants linked to its bank facility agreement, including raising the ceiling on its net leverage ratio to 6.5 times cash profit at the end of June 2018 (the ratio stood at 5.4 at the period-end). There was a net cash inflow of $12.9m (£9.5m) at the operating level for the period, and management intends to keep a lid on costs and capital outlays.
Barclays foresees adjusted profit of $1.6m for the year-end, with earnings at break-even level, against $30.8m and 8¢ in 2016.
| GULF MARINE SERVICES (GMS) | ||||
| ORD PRICE: | 46p | MARKET VALUE: | £161m | |
| TOUCH: | 45.75-46p | 12-MONTH HIGH: | 75p | LOW: 38p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 100 | |
| NET ASSET VALUE: | 125¢ | NET DEBT: | 86% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | ($m) | profit ($m) | share (¢) | per share (¢) |
| 2016 | 110 | 28.1 | 7.95 | 0.41 |
| 2017 | 58.5 | 2.3 | 0.13 | nil |
| % change | -47 | -92 | -98 | - |
| Ex-div: | - | |||
| Payment: | - | |||
| £1=$1.35 | ||||
