There is no prospect of any significant upturn in dire offshore vessel markets this year, according to DOF Group chief executive Mons Aase.
The Norwegian executive said it was impossible to see an end to a slump worsened by the recent oil price plunge and demand drops caused by the Covid-19 pandemic.
"It's more difficult than ever to comment on the outlook," he said on a first-quarter results webcast. "We expect activity levels to stay low. We will see a sharp reduction in operational Ebitda for the last three quarters of the year."
April and May saw very low activity levels, with the global spot markets enduring extremely low utilisation after Covid-19 hit, Aase added.
He said the virus will delay offshore projects, "but, when restrictions are lifted, we do expect some of these projects will come back and be executed, hopefully later in the year".
But he warned: "If the market continues as it is today, it will be very difficult to build new backlog. Tender activity is very low."
Company has to try its best each day
Aase said the company cannot predict when the situation will change.
"We just have to do our best day to day," he said.
The company's current contract backlog is NOK 19bn ($1.95bn).
Aase said the first quarter actually saw its best operational result since 2015, with NOK 804m of Ebitda. But it booked vessel impairment losses of NOK 1.5bn and currency losses of NOK 2.9bn.
"We also expect to be hit by a huge drop in earnings going forward for the remainder of 2020 and, at the end of May, we had 18 vessels in lay-up," he said.
Contract coverage is 69% of vessel days for the second quarter and 51% for the third period.
Chief financial officer Hilde Dronen said debt increased NOK 2.8bn due to currency effects, "even though we have repaid some debt this quarter".
The group has negative equity of NOK 245m, "impacted by impairments and currency loss", she added.
Total liabilities are NOK 27.7bn.
DOF is in talks over a new refinancing package to see it through the slump.
The offshore vessel owner has entered into a standstill agreement with the majority of its secured lenders and bondholders, giving the group a temporary deferral of payments of interest and instalments until 30 June.
A further extension is expected as it tries to clinch a long-term deal.
The net loss in the first quarter was NOK 4.11bn, compared with NOK 133m in 2019.
