London investment research company, Edison, issued an updated report today following the publication of Medserv’s results for year 2016. Edison highlighted the expected downturn in Medserv’s results for 2016 attributable to the current market conditions and delays in drilling programs.
Edison also produced a two-year forecast which indicates that the delays are also likely to adversely affect prospects in the first part of 2017, but they expect a “solid recovery in profitability and cash returns should conditions continue to stabilise”.
The main reason for the downturn reported for 2016 is the persisting oversupply of fossil fuel on the global markets with a consequence that projects contracted to commence in 2016 in both Malta and Portugal have been postponed to the second half of 2017. Trading conditions in Iraq were slow in year 2016 but are returning to normal. The Group also reports that it has managed to retain all its existing major contracts for Malta and its shore bases in Portugal and Cyprus are expected to resume operations in the second half of 2017. The Group emphasised the importance of the successful implementation of its restructuring plan. Through the acquisition of METS, Medserv is now servicing both the offshore and onshore oil and gas activities. Through this acquisition the Group has managed to penetrate the Middle East market and introduce a new strong revenue stream. This has already resulted in the award of the largest contract ever obtained by the Group which will further boost the growth and reputation of METS in the Middle East.
Edison forecast that Medserv should experience “a progressive recovery in its offshore logistical base activity through 2018 which combined with continued growth at METS, should see a more meaningful improvement in earnings and cashflow”
The full Edison report may be viewed here.