Japan's Modec has revised downwards its forecast ordinary profit and net profit for the 2021 financial year due to operational and construction issues with floating production, storage and offloading vessels.
The Tokyo-based floating production giant said its forecast of consolidated ordinary profit for the year ending 31 December 2021 will be a loss of 4.5 billion yen (US$39.5 million), while profit attributable to owners will be a loss of 6.5 billion yen ($57 million), based on 400 billion yen in revenue.
The previous forecast was 100 billion yen in ordinary profit and 50 billion yen in net profit.
Modec said that "ordinary profit" and profit attributable to owners of the parent company have been revised downward, primarily due to prolonged shutdown of several FPSOs operated in Brazil, an impairment loss for the Cidade de Santos FPSO and a decrease in profitability of ongoing FPSO construction "due to Covid-19 etc".
The company highlighted four specific issues.
First, a number of Covid-19 cases were found on the flotel which was used for a special maintenance campaign for the Cidade de Santos FPSO offshore Brazil.
As a consequence, the number of persons on board was limited and the shutdown period for the special maintenance was considerably longer due to the manpower shortage.
Second, the Cidade de Niteroi FPSO offshore Brazil shut down its operation in order to repair broken equipment. No income is being recognized during the shutdown, hence a loss of charter and operations and maintenance income.
Third, the company has recognised a 2.9 billion yen ($25.4 million) impairment loss in the third quarter of the 2021 fiscal year on the book value of the Cidade de Santos.
Finally, the profit of several ongoing EPCI projects will be lower than expected because of delays in construction work.
Meanwhile, Modec reported its third-quarter results, with 270.6 billion yen in new orders, nearly 100 billion yen more than the same quarter last year, and revenue of 323.3 billion yen compared to 230 billion in the same period last year.
Modec had seven large FPSO projects under construction as at June 2021 — four for Brazil's Petrobras, one for Woodside's Sangomar project in Senegal, one for Eni's Area 1 project in Mexico, and one for Equinor's Bacalhau in Brazil.
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