Gulf Marine Services posts fall in net profit as it slashes debt

Gulf Marine Services (GMS) posted a hefty dent in net profit in its half-year results despite a sizeable rise in revenue, as the highly levered business continues to focus on debt reduction.

The London-listed oil services provider, which operates self-propelled and elevating support vessels for the oil sector out of the United Arab Emirates, saw year-on-year revenue rise nine per cent in the six months to 30 June.

The company reported revenue for the period of $80.7m (£61.5m), up from $74.3m (£56.6m) in the first half of 2023 and $66.4m (£50.6m) in 2022.

The growth was largely down to improvements in fleet average day rates and increased demands for vessels from its S-Class, a type of self-elevating jack-up barge.

Improved takings helped gross profit and earnings before interest, tax, debt, and amortisation (EBITDA) rise similarly, up 11 per ent and nine percent, respectively.

However, net profit tumbled by 15 per cent to $7.4m (£5.6m) due to the impact of fair value warrants kicking in after gains in the share price and an increase in tax expenditure.

GMS made considerable inroads in its attempts to deleverage in the first half, cutting its net leverage by 30 per cent to 2:62:1. In 2023, its leverage stood at 3:75:1, while in 2022, with the firm still reeling from a challenging pandemic period. It stood at 4:56:1.

The results follow an impressive recovery from the pandemic, culminating in a strong set of full-year results in which it raised the prospect of a dividend and upgraded its outlook.

Mansour Al Alami, GMS’s executive chairman, said: “We remain committed to our strategy of deleveraging, prioritizing the shift of value from lenders to shareholders, and are on course to meet our 2024 adjusted EBITDA guidance.

“This progress has been bolstered by higher day rates and disciplined performance in the first half of the year. Despite ongoing challenges such as operational disruptions, inflation, and elevated borrowing costs, we are actively managing these risks and are confident in our ability to further navigate the Company towards continued success.”