Ocean Wilsons Holdings Limited- Interim Management Statement for the six months ended 30 June 2016

Hamilton, Bermuda – August 15, 2016– In a filing with the Bermuda Stock Exchange (“BSX”), Ocean Wilsons Holdings Limited (the “Company” or “Ocean Wilson”; Ticker: OCN.BH) announces its interim management statement for the six months ended 30 June 2016.

Ocean Wilsons Holdings Limited (“Ocean Wilsons” or the “Company”) today provides its interim management statement for the six months ended 30 June 2016.

Key points

•    Profit before tax up 43% to US$57.1 million (2015: US$39.9 million).
•    The Brazilian Real appreciated 18% in the period against the US Dollar at  period end from 3.90 to 3.21 while the average US Dollar/Brazilian Real exchange rate in the period at 3.70 was 25% higher than the comparative period in 2015 of 2.97.
•    Revenue in US Dollar terms 20% lower at US$214.7 million (2015: US$268.9 million) impacted by the lower average Brazilian Real exchange rate. Revenue in BRL terms at R$793.3 million was in line with the prior period, (R$797.2 million).
•    Earnings of 56.0 cents per share (2015: 33.8 cents).
•    Dividends paid to shareholders in the period of US$22.3 million (2015: US$22.3 million).

Chairman’s Statement
Introduction
The Group delivered a solid result for the first half of 2016 in a challenging economic environment. Following the steep devaluation of the Brazilian Real “BRL” in 2015 against the US Dollar “USD”, the weaker average USD/BRL exchange rate in the period adversely impacted revenue, although the appreciation of the BRL against the USD at period end enhanced our bottom line earnings. Operating margins for the period remain robust at 21% (2015: 20%) underpinned by our two main businesses, towage and container terminals. Container volumes at our two container terminals continued to improve in the period while towage volumes experienced some market weakness.

Group Results

Revenue
Revenue for the six months ended 30 June 2016 at US$214.7 million was 20% lower than the comparative period in 2015, (US$268.9 million) although revenue in BRL terms at R$793.3 million was in line with the prior period, (R$797.2 million). The principal causes of the decrease in revenue in USD terms were a weaker average USD/BRL exchange rate in the period which was 25% higher than the comparative period in 2015, (3.70 v 2.97) and lower shipyard activity. Port terminal and logistics revenue fell 19% to US$97.6 million (2015: US$121.0 million) mainly due to the higher average USD/BRL exchange rate used to convert revenue into our reporting currency and reduced logistics operations. Container volumes handled at Tecon Rio Grande and Tecon Salvador for the period grew 5% to 503,500 twenty-foot equivalent units “TEUs” (2015: 481,600 TEUs) driven by higher export, cabotage and empty container movements. Import volumes continue to suffer from the weak BRL. Towage and ship agency revenue at US$106.0 million was US$8.8 million lower than prior period (2015: US$114.8 million) mainly due to fewer towage special operations in the period, weaker harbour towage volumes and the exchange rate impact on domestic invoicing denominated in BRL. Towage special operations in 2015 were boosted by revenue from firefighting support in the port of Santos. Shipyard revenue at US$11.0 million (2015: US$33.2 million) was adversely impacted by lower third party construction as the market for vessel construction in Brazil remains weak.

Operating Profit
Operating profit for the period was US$8.9 million lower than the comparative period in 2015 at US$44.6 million (2015: US$53.5 million) principally due to the decrease in revenue and exchange rate impacts. Operating margins for the period at 21% were in line with prior year (20%). Raw materials and consumables used at US$16.3 million were US$17.0 million lower than prior period (2015: US$33.3 million) reflecting the decrease in third party shipyard activity. The higher average USD/BRL exchange rate had a positive impact on BRL denominated costs when converted into USD. Employee expenses were 17% lower than prior period at US$68.2 million (2015: US$82.1 million) and other operating expenses 14% lower at US$61.2 million (2015: US$71.2 million). In addition to the exchange rate effect on these costs, employee expenses benefited from reduced headcount at our logistics and shipyard businesses. The depreciation and amortisation expense in the period decreased US$4.5 million to US$24.4 million from US$28.9 million in 2015 as a result of the weaker BRL and changes made to the Tecon Rio Grande and dry-docking depreciation policies in 2015.

Share of results of joint ventures
The share of results of joint ventures is Wilson Sons’ 50% share of net profit for the period from our offshore support vessel joint venture. Net profit attributable to Wilson Sons increased US$0.8 million to US$2.9 million (2015: US$2.1 million). Operating profit for the joint venture in the period was US$8.4 million lower at US$13.6 million (2015: US$22.0 million) principally due to fewer operating days as some platform supply vessels (PSVs) were off hire during the period. The PSVs Gaivota and Albatroz were rehired on term contracts by Petrobras in the first quarter while our new PSVs Pardela and Mandrião remain available in the Brazilian spot market. Total operating days in the period at 2,990 were 8% lower than the comparative period in 2015 of 3,266.

Investment revenues
Investment revenues were US$2.0 million lower at US$5.9 million (2015: US$7.9 million) due to lower average cash balances and the currency mix of investments made.

Investment gains and losses
Other losses of US$7.3 million (2015: US$3.4 million gain) arose from the Group’s portfolio of trading investments and reflect the profit realised on disposal of trading investments in the period of US$1.0 million (2015: US$1.6 million) less the decrease in the fair value of trading investments at period end of US$8.3 million (2015: US$1.8 million gain).
Finance costs
Finance costs for the period were US$7.8 million positive compared with a US$20.6 million charge for the comparative period in 2015, mainly as a result of exchange gains on foreign currency borrowings of US$13.9 million (2015: US$13.8 million loss).
Exchange rates
The Group reports in USD and has revenue, costs, assets and liabilities in both BRL and USD. Therefore movements in the USD/BRL exchange rate can impact the Group both positively and negatively from year to year. In the six months to 30 June 2016 the BRL appreciated 18% against the USD from R$3.91 at 1 January 2016 to R$3.21 at the period end. In the comparative period in 2015 the BRL depreciated 17% against the USD from R$2.66 to R$3.10.

Please click on the below link to view the entire filing: www.bsx.com/CompanyDocuments//2016%20Financials/2016%20Interim%20Management%20Statements/OWHL-IMS-%2030%20June%202016.pdf