Gulf International Services posts net profit of QR54 mn for 2021

Tribune News Network Doha Gulf International Services (GIS) on Thursday reported a net profit of QR54 million for 2021 with earnings per share of QR0.029....

Tribune News NetworkDoha Gulf International Services (GIS) on Thursday reported a net profit of QR54 million for 2021 with earnings per share of QR0.029.Group’s revenue for 2021 amounted to QR3.1 billion, an increase of 3 percent compared to last year. Revenue growth from insurance, aviation and drilling segments was mainly offset by negative growth in revenue from the catering segment.Group reported an EBITDA of QR550 million for 2021. The growth in Group revenues led to an overall increase in net earnings. Moreover, an impairment provision amounting to QR308 million booked during last year, significantly impacted last year’s profitability compared to the current year.Group’s finance cost declined by 21 percent to reach QR 129 million, compared to QR162 million for last year, against a backdrop of lower interest rates and repayment of some loans. Similarly, general and administrative expenses declined by 7 percent on account of continued optimisation initiatives.Moreover, the performance of the Group’s investment portfolio was positively impacted by a recovery in capital markets, and a variance amounting to QR23 million was noted on account of unrealised gains on the revaluation of investment securities when compared to last year.Revenue for the fourth quarter of 2021 represented an increase of 4 percent compared to the third quarter of 2021, mainly on account of growth in revenue from aviation, catering and drilling segments, partially offset by a decline in revenue from the insurance segment.Net profit for the fourth quarter of 2021 amounted to QR13 million with a reduction of 69 percent compared to the third quarter of 2021. This was mainly linked to a foreign currency revaluation loss from GHC’s Turkish subsidiary and impairment provisions relating to receivables within GHC.Moreover, insurance segment also witnessed a decline in net earnings during the fourth quarter of 2021 due to an unrealised loss reported on its investment portfolio, amid negative movements in capital markets. The drilling segment also furthered its losses, due to higher accruals in relation to operational costs. Group’s total assets remained relatively flat during the year and stood at QR9.9 billion as of December 31, 2021, compared to last year. Cash and short-term investments stood at QR698 million, up by 1 percent as compared to December 31, 2020.Total debt at the Group level amounted to QR4.3 billion as of December 31, 2021. Current levels of debt continue to weigh on the Group’s net earnings, as finance cost is one of the key cost ingredients and specifically limits the drilling segment’s ability to accomplish the required profitability. Commenting on the Group’s financial and operational performance for 2021, the GIS board said, “As we enter a post-pandemic recovery phase, our Group companies demonstrated resilience. Our strategic alignment with our customers within the drilling segment was a key achievement and new contracts won internationally for the first time in the segment’s history. Moreover, the ease of pandemic linked restrictions reflected positively on our asset utilisation, especially within our aviation segment internationally. Also, owing to our aggressive market penetration strategy within the insurance segment, we successfully enhanced our presence within the general insurance line of business and SME sector within medical insurance.“We look forward to building a resilient future via persistent improvement to our asset utilisation while keeping ourselves competitive by achieving cost efficiencies with an eye on sustainability to ensure long term value creation.”“Recovery for the Group, following constructive macroeconomic drivers along with improved oil price dynamics, remained uneven where aviation and insurance segments continued to demonstrate a persistent improved set of results against last year. Drilling segment remained under pressure until the first half of the year, however, the segment started to show signs of recovery since the third quarter of 2021,” the board said.“The catering segment did not take advantage of macroeconomic tailwinds immediately. The sector suffered from COVID-linked restrictions and challenges that affected the hospitality industry and induced lower revenues, with higher operating costs. Nevertheless, the segment started to show signs of recovery since the fourth quarter of 2021,” it said.The drilling segment witnessed a recovery since the second half of 2021, driven by several factors including revised rig rates within the off-shore segment which took effect from July 2021; coupled with certain suspended rigs being re-deployed and commenced operation since the third quarter of 2021.Moreover, Gulfdrill JV became fully operational with the deployment of the remaining three rigs during the first half of 2021, despite delays caused by COVID-19 restrictions.The aviation segment continues to witness improved performance with better flying activity within both domestic and international operations on account of ease of travel restrictions, coupled with the successful renewal of some international aviation contracts.Also, additional contributions from MRO business continued to support the segment’s financial performance. Moreover, during the year, the Turkish subsidiary and Moroccan joint venture added a new aircraft each, in order to meet increased market demand. This was in addition to a new helicopter (AW139) being added to the domestic fleet during the year, as a back-up to the existing fleet.The insurance segment managed to build up its strong performance by further expanding both the medical and general lines of businesses, where successful renewal and/or additional coverage for major contracts within the energy line of business were the main highlights. Additionally, the segment continued to expand its footprints within the domestic SME market, specifically within the medical line of business and added new clients. The catering segment continues to remain under pressure with restrictions mandated since the start of the pandemic in relation to food delivery, transportation and manpower accommodation sectors. This has affected the segment’s performance in terms of lowered revenues, coupled with an additional layer of costs incurred in order to comply with the requirements leading to negative margins for the segment. However, despite stiff market challenges, the segment was able to win new contracts within the manpower line of business. Especially, during the fourth quarter of 2021, the segment came back strongly and reported its first quarterly profit for the year, as the hospitality industry survives back to back pandemic waves.The drilling segment reported revenue of QR 1 billion for 2021, up by 10 percent compared to last year. Growth in revenue was mainly driven by comparably higher newly implemented rig day rates for the offshore fleet, which took effect from July 2021. In addition, two of the suspended rigs commenced operations during the third quarter of 2021, which positively added to the segment’s topline. Moreover, the deployment of three additional rigs as part of Gulfdrill JV’s fleet during the second quarter of 2021 had a positive impact on the segment’s revenue trajectory, amid higher management fees.The aviation segment reported total revenue of QR 722 million for 2021, with an increase of 5 percent compared to last year. The increase was mainly attributed to higher-flying activity recorded within both domestic and international operations, coupled with growth in revenue noted across all the businesses within the segment. Segment’s net profit reached QR221 million, representing an increase of 91 percent compared to last year, mainly on account of revenue growth.Revenue within the insurance segment for 2021 increased by 1 percent as compared to last year to reach QR 988 million. Growth in premiums from the general insurance line of business, almost entirely offset against the decline in premiums from the medical line of business. Segmental net earnings increased by 16 percent as compared to last year, to reach QR 60 million. Strong growth in net profits was mainly supported by a robust recovery within the segment’s investment portfolio on the back of a recovery in capital markets. The unrealised gain on revaluation of investment portfolio contributed QR15 million positively towards the segment’s net earnings for 2021 in comparison to last year.The catering segment reported revenue of QR 361 million, with a decline of 11 percent as compared to last year. On a quarter-on-quarter basis, the catering segment witnessed an increase in revenue during the fourth quarter of 2021.The board has recommended no dividend payment for 2021 in order for the Group to deploy the retained funds to capture the present and future opportunities and remain financially flexible with the current debt structure.