Gulf International Services (“GIS” or “the Group”; QE: GISS), one of the largest services groups in Qatar with interests in a broad cross-section of industries, ranging from insurance and re-insurance to onshore and offshore drilling, accommodation barge, helicopter transportation and catering services, today announced its financial and operational results for the nine month period ended 30 September 2019.
Business performance and outlook
Since the beginning of 2019, GIS has undertaken commendable measures aimed at improving its financial performance through cost optimization, supported by stronger operational performance. The Group continues to execute some of the initiatives, which are in various stages of completion and are on track.
The financial results reflected continued performance by the drilling segment, demonstrating a strong recovery due to high utilization of its offshore rigs. The insurance and aviation segments also delivered improved set of financial results, contributing to the Group’s bottom line, mainly led by market share gains and the introduction of new business lines.
Commenting on the Group’s performance, GIS management, said: “GIS delivered an improved set of financial and operational results led by the Group’s focus on high utilization of its assets, combined with a commitment to expand market share. The strategy has particularly helped the drilling and insurance segments to contribute to the Group’s performance. The Group continues to work on rationalizing operating costs, which are at various stages of implementation to reposition the Group’s market standing. Also, the Group has embarked on new initiatives to improve the capital and debt structures and we are confident that this would further improve the overall operational efficiency in the near future.”
Financial performance – YTD 2019 and Q3 2019
The Group’s total revenue for the first nine months of 2019 grew 18% to reach QR 2.2 billion, compared to the corresponding period last year. The revenue growth, supported by the strong operational performance, was largely reflective of the growth recorded by insurance and drilling segments. . Net profit for the nine month period ended 30 September 2019, reached QR 35 million, a decline of 12% compared to the same period last year.
Revenue for the third quarter reached QR 767 million, representing an increase of 2% compared to the second quarter of 2019. Net profit for the third quarter of 2019 advanced 31% to reach QR 5.3 million compared to QR 4.0 million in the second quarter of 2019.
On the liquidity front, the closing cash, including short-term investments, stood at QR 1.1 billion with a total debt of QR 4.9 billion as at 30 September 2019.
Operational highlights by segment
Drilling: The performance of the drilling segment was fueled by the offshore sector with the successful deployment of the new offshore drilling rig, ‘West Tucana’, contracted via a strategic partnership.
Furthermore, the segment continued to focus on maximum utilization of its assets such as the deployment of the lift-boat ‘Rumailah’ at the beginning of the year, after undergoing repair services. As a result of improved activities, the segment on overall basis was able to reduce the net loss in the first nine months of this year, when compared to the same period last year.
Looking ahead, the drilling segment is uniquely placed to unlock solid growth opportunities, mainly due to the North Field expansion project for which GIS was awarded a contract to provide six premium jack-up rigs, which will commence operations in various phases in 2020.
Insurance: The insurance segment improved against a backdrop of expansion in the core energy business. Also, the ongoing market expansion strategy by the Group’s medical business acted as a critical catalyst in securing a large number of corporate clients. Notably, the segment also secured three major contracts during the first nine months of the year. In a bid to minimize the risk associated with medical insurance claims, the Group entered into a reinsurance model, wherein the claim settlement process would be carried out more efficiently.
Aviation: The aviation segment reported a moderate growth compared to the last year, driven mainly by its international division that secured short-term contracts in Pakistan and South Africa, and supported by higher revenues by its Turkish subsidiary, Red Star Aviation. The domestic aviation business, primarily comprising of Oil & Gas services and VIP services, continued its positive business trajectory. Furthermore, the acquisition of 49% stake in Air Ocean Maroc is set to reignite growth within the segment going forward.
Catering: The Group’s catering segment was impacted due to the demobilization of major contracts and a reduction in labour accommodation occupancy. However, the segment continues to explore opportunities from both industrial and non-oil and gas sectors.
Earnings Call
GIS will host an IR Earnings call of its third quarter earnings with investors to discuss its results, business outlook and other matters on Tuesday, November 5, 2019 at 1:30 p.m. Doha Time. The IR presentation that accompany the conference call will be posted on the publications page of GIS.