Pacific Radiance’s profit plunged 60% in Q3

Blame it on its weak subsea segment.

Pacific Radiance reported a 60% quarter-on-quarter drop in profit to $16.9m (US$13.1m), dragged by a gross loss position in its subsea segment. On a year-on-year basis, Pacific Radiance’s profit climbed 24%.

According to OSK DMG, one of Pacific Radiance’s subsea vessel was dry-docked for 26 daysfor the installation of a new stern thruster, resulting in a $4.1m (US$3.2m) gross loss in the segment.

“The utilisation rate for the offshore support vessel (OSV) fleet was c.80%, down c.8ppts QoQ but still remained healthy, as one vessel suffered a product recall by an equipment manufacturer which caused 40 days of downtime. Going forward, we expect a rebound in the subsea segment to small profits in 4Q14 and the OSV fleet utilisation to rise slightly,” noted OSK DMG.

Here’s more from OSK DMG:
At current oil prices, Radiance’s shallow-/mid-water fleet is largely unaffected with charter rates still steady across its various markets. Management continues to see growth opportunities in Mexico and Africa.

Radiance manages the construction of its newbuild vessels in Chinese yards unlike most of its peers, yielding cost advantages up to 40%. The company thus retains the ability to slash charter rates in the worst of times and still remains profitable. Management is “cautiously optimistic” that it can “deliver steady growth over the medium to long term”.