GIS reports net profit of QR83 million for Q1

Gulf International Services (GIS) on Wednesday announced that it reported a net profit of QR83 million for the first quarter of 2022 with earnings per share of QR 0.045.
The Group’s revenue for the three-month period of 2022 amounted to QR835 million, an increase of 18 percent compared to the same period of last year. Revenue growth from the aviation, drilling and catering segments led to an overall increase in the Group revenue. This was partially offset by a negative contribution in revenue from the insurance segment.
Group reported an EBITDA of QR198 million and recorded a net profit of QR 83 million for the three-month period of 2022. The growth in Group revenues led to the overall increase in net earnings. On the other hand, the Group’s direct costs increased by 7 percent mainly linked to inclined commercial activity.
Group’s finance cost marginally declined by 1 percent to reach QR30 million for the first quarter of 2022, against a backdrop of lower interest rates. On the contrary, general and administrative expenses increased by 7 percent mainly on account of higher professional and consultancy fees paid within the Group.
Revenue for the first quarter of 2022 declined by 1 percent compared to the fourth quarter of 2021, mainly on account of a decline in revenue from the insurance segment. However, revenue growth from the aviation, catering, and drilling segments, almost offset the decline in revenue from the insurance segment.
On the other hand, net profit for the first quarter of 2022significantly increased by 545 percent compared to the fourth quarter of 2021. Higher profits were reported mainly due to reporting comparatively lower foreign currency revaluation losses from GHC’s Turkish subsidiary and the absence of impairment provisions relating to receivables within GHC which were reported in the fourth quarter of 2021. The drilling segment also reduced its losses, in line with improved revenues. Also, the insurance segment investment portfolio positively impacted the first quarter of 2022net profits for the Group, with a growth of QR42 million noted on account of the segment’s investment income versus the fourth quarter of 2021.
Group’s total assets remained relatively flat during the year and stood at QR10.1 billion as of March 31, 2022, compared to last year. Cash and short-term investments stood at QR 837 million, up by 20 percent compared to December 31, 2021.
Investment income includes dividend income, capital gains, unrealized gain on market-to-market of the investment portfolio and finance income. Total debt at the Group level amounted to QR4.3 billion as of March 31, 2022. 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. Group’s management is in continuous discussion with different key stakeholders to restructure the debt with an aim to provide greater flexibility to manage liquidity and ease pressure on the Group’s financial position.
The drilling segment reported a revenue of QR 321 million for the three-month period of 2022, up by 62 percent compared to the first quarter of 2021. Revenue growth has largely been linked to new rig day rates implemented for the offshore fleet since the mid of last year (July 21). Also, the redeployment of the two onshore suspended rigs (GDI-5 and GDI-7) during the third quarter of 2021, positively contributed to the topline performance.
Moreover, full deployment of Gulfdrill JV’s fleet during the second quarter of 2021, had a positive impact on segment revenue for the first quarter of 2022 on account of comparatively higher management fees.
The segment reported a net loss of QR10 million for the three-month period ended March 31, 2022, compared to a net loss of QR72 million for the first quarter of 2021. The reduction in losses was mainly attributed to growth in segmental revenue.
On a quarter-on-quarter basis, losses for the segment reduced by 76 percent mainly due to better revenues which increased by 6 percent against the fourth quarter of 2021, and lower operational cost accruals reported during the first quarter of 2022 versus the fourth quarter of 2021.
Growth in revenue mainly came from higher utilization of assets, also supported by new contracts won in KSA & Maldives for liftboats.
The aviation segment reported total revenue of QR 206 million for the three-month period of 2022, with an increase of 25 percent compared to the first quarter of 2021. The increase was mainly attributed to higher-flying activity recorded within both domestic and international operations, coupled with growth in revenue noted across the international operations, mainly from the Turkish subsidiary.
Also, continuous growth within the MRO business segment contributed positively to the segment topline. The segmental net profit reached QR79 million, representing an increase of 59 percent compared to the first quarter of 2022, mainly on account of growth in revenue.
The segment revenue for the first quarter of 2022 against the fourth quarter of 2021 increased by 6 percent, mainly due to additional revenue reported from the MRO segment due to higher volumes of maintenance work and continued improvement in domestic flying hours. However, flying hours for international operations declined in the fourth quarter of 2021. The first quarter of 2022 profitability increased by 70 percent mainly due to improved revenue, lower foreign currency revaluation losses on results from the Turkish subsidiary and the absence of provisions in relation to overdue receivables during the first quarter of 2022, which negatively affected 4Q-21 segmental net earnings.
Revenue within the insurance segment for the three-month period of 2022, decreased by 24 percent as compared to the first quarter of 2021, to reach QR 195 million. The decline in revenue was mainly linked to the loss of two insurance contracts within the medical line of business. This decline was partially offset by growth in premiums from the general insurance line of business, on account of new contracts and renewals of existing contracts.
On the contrary, segmental net earnings increased by 22 percent as compared to the first quarter of 2021, to reach QR 19 million.
The growth in bottom-line profitability was mainly supported by a robust performance within the segment investment portfolio on the back of a surge in capital markets. A growth of QR 27 million (+207 percent) was noted on account of investment income against the first quarter of 2021.
Moreover, the non-renewal of the two medical insurance contracts led to a reduction in net claims compared to the first quarter of 2021.
Segment revenue for the first quarter of 2022 against the fourth quarter of 2021 decreased by 20 percent, mainly due to the loss of two insurance contracts within the medical line of business. However, segmental profitability for the first quarter of 2022 grew by 83 percent in comparison to the fourth quarter of 2022, mainly due to higher investment income reported during the first quarter of 2022 against the fourth quarter of 2021.
The catering segment reported a revenue of QR 113 million in the first quarter of 2022, an increase of 31 percent as compared to the first quarter of 2021. The revenue increase was mainly due to the growth in revenue within the manpower segment, on the back of realisations from a new contract won last year. Additionally, certain contracts have been renewed within the manpower segment, with broader scope improving overall service volumes for the segment.
The segment reported a net profit of QR100k for the three-month period of 2022, compared to a net loss of QR0.5 million for the first quarter of 2021, mainly due to higher revenues. On a quarter-on-quarter basis, the catering segment witnessed an increase in revenue during the first quarter of 2022 due to improved revenue from the manpower services business. Segmental revenue grew by 10 percent against the fourth quarter of 2021.
On the hand, segmental profit declined by 97 percent mainly due to higher operational costs pertaining to the mobilisation of a manpower contract won last year. Also, a one-off gain on the disposal of assets reported during the fourth quarter of 2021 affected quarter-on-quarter profitability.