Gulf International Services (GIS) has reported a net profit of QR49m for the first nine months of this year ended September 30, 2020 (Q3 2020), registering a significant 41 percent growth compared to the corresponding period last year. Group’s revenue for the period witnessed a moderate increase of 1 percent, to reach QR2.3bn, compared to the same period last year, driven by growth across all the business segments, with an exception of drilling segment. Earnings per share (EPS) of the company stood at QR0.026 for the period (Q3 2020) against QR0.019 for the same period last year.
GIS is one of the largest diversified service groups in Qatar with interests in oil and gas drilling, insurance, helicopter transportation and catering services. Despite the macroeconomic challenges the Group’s continuous efforts towards strategic repositioning, since the last down cycle in the oil and gas industry, success was achieved to an extent, where the Group started to show signs of early recovery from the start of 2019 up until Q1-20. However, since the outbreak of COVID-19 pandemic and while entering into the second quarter of 2020, the Group endured another layer of macro challenges, with crude oil prices plunging to a record low, coupled with strict implementation of lockdowns limiting the economic activities across the global markets.
“These latest macro headwinds enforced increased competition in the market and weighed on the Group business performance, and imposed pressure on commercial rates, given the lowered operation levels. These impacts were mostly felt in the drilling segment, with stiff competition on asset utilization burdened the market environment,” GIS Group said in a statement.
The drilling industry went through a downturn led by turmoil in crude prices, with limited demand and economic activity. In response to these market conditions, many operators sharply curtailed their exploration and development activities, which affected the demand for drilling rig services. GDI was not immune to these industry trends, where a decline in asset utilization coupled with the repricing of day-rates at a lower level was witnessed, negatively affecting the segment revenue and margins evolution.
However, despite the underlying external factors, which remains out of the Group’s control, all the segments have put efforts to withstand these challenging conditions and mitigate the business and operational risks, in order to build profitability. The drilling segment made continuous efforts to optimize cost in all possible areas of business, to provide financial flexibility, while ensuring that safety and performance standards is not compromised. The aviation segment witnessed strong improvement in terms of financial performance.
The year-on-year performance for the segment was aided by strong revenue growth, as the segment maintained margins year-on-year, on the back of consistent operating costs. The insurance segment continued its efforts in improving premiums and was successfully able to renew additional contracts during the year, with superior pricing terms. Moreover, new clients added to the medical segment since the start of the year, continuing its momentum of expanding market share within the medical line of business.
The catering segment successfully won new catering and manpower contracts, with higher occupancy levels at the site camps. Commenting on the Group’s financial and operational performance for the nine months period of 2020, GIS said: “Despite macroeconomic headwinds, GIS continued to reposition its segments led by the Group’s commitment to expand market share and focus on rationalizing its operating costs, while ensuring effective utilization of assets, in order to build solid growth prospects.
Specifically, during this year, we further emphasized our optimization drive across the segments and implemented new cost optimization measures.” The company added: “In response to contain the spread of COVID-19 pandemic and ensure our operations remained safe and resilient, our Group companies implemented measures to ensure the safety of our employees and spur business continuity. Going forward, GIS group companies will continue their diligent efforts in ensuring tighter cost controls to enhance competitiveness which will result in maintaining our current market share, improve asset utilization and drive future profitability and long-term shareholder value creation.”
