Caverton Offshore Support Group Plc delivered strong revenue growth of 42.7%, reaching ₦45.64 billion in 2024, driven by higher helicopter charter revenue and vessel time charter services. However, despite this top-line expansion, the company reported a record loss of ₦50.53 billion, primarily due to severe foreign exchange losses and rising finance costs.
The sharp decline in profitability resulted in a Basic Earnings Per Share (EPS) loss of ₦(15.08), down from ₦(3.85) in 2023, reflecting intense financial pressure from forex volatility and debt financing costs.
Key Financial Highlights (2024 vs. 2023)
- Revenue: ₦45.64 billion (2023: ₦31.99 billion) ↑42.7%
- Operating Profit: ₦13.72 billion (2023: ₦7.16 billion) ↑91.6%
- Profit/(Loss) Before Tax (PBT): ₦(50.53) billion (2023: ₦(12.66) billion) ↓299%
- Profit/(Loss) After Tax (PAT): ₦(50.53) billion (2023: ₦(12.89) billion) ↓292%
- Basic Earnings Per Share (EPS): ₦(15.08) (2023: ₦(3.85)) ↓292%
While revenue and operating profit expanded, the company’s foreign exchange losses, increased finance costs, and higher operating expenses led to deepening net losses.
Revenue Growth: Key Drivers
Caverton Offshore recorded its highest-ever revenue, driven by:
1. Surge in Helicopter Charter Revenue (+365%)
- Helicopter charter services revenue increased to ₦8.27 billion, compared to ₦1.78 billion in 2023.
- Growth was fueled by higher demand from oil & gas companies and offshore logistics contracts.
2. Stability in Helicopter & Airplane Maintenance Revenue
- Revenue from maintenance services remained steady at ₦3.88 billion, slightly up from ₦3.79 billion in 2023.
- This segment remains a reliable income source despite the company’s financial challenges.
3. Increase in Vessel & Boat Charter Revenue (+47%)
- Revenue from vessel charters and boat services grew to ₦2.00 billion, up from ₦1.36 billion in 2023.
- This highlights a growing contribution from non-aviation-related operations.
4. New Revenue Categories Emerging
- Other revenue sources contributed ₦6.96 billion, adding new streams to diversify earnings.
Despite strong revenue growth, the company’s net profitability declined significantly due to macroeconomic headwinds and financial challenges.
Earnings Per Share (EPS) Decline: Key Factors
Caverton Offshore’s EPS plunged 292% to -₦15.08, reflecting substantial losses from forex and financial expenses.
1. Massive Foreign Exchange Losses (+835%)
- Net forex loss skyrocketed to ₦43.49 billion, compared to ₦4.65 billion in 2023.
- The sharp depreciation of the naira significantly impacted foreign-denominated debt repayments and aircraft leasing costs.
2. Rising Finance Costs (+51.4%)
- Net finance cost increased to ₦8.81 billion, up from ₦5.82 billion in 2023.
- Interest on debts and borrowings surged to ₦8.12 billion, reflecting higher debt levels and costlier financing terms.
3. Higher Administrative & Aircraft Operating Costs
- Administrative expenses increased to ₦12.07 billion, up from ₦10.74 billion.
- Aircraft insurance premiums doubled to ₦3.87 billion, while aircraft right-of-use costs more than doubled to ₦5.12 billion.
These factors severely affected net margins, despite higher revenue and strong operating profit expansion.
Operational Highlights & Cost Challenges
1. Rising Crew Salaries & Insurance Costs
- Crew salaries increased to ₦10.23 billion (2023: ₦7.74 billion), driven by inflation and labor market adjustments.
- Aircraft insurance expenses jumped to ₦3.87 billion, reflecting higher risk premiums due to global market conditions.
2. Higher Aircraft Leasing & Maintenance Costs
- Right-of-use aircraft costs surged to ₦5.12 billion, more than doubling from ₦2.31 billion in 2023.
- Consumables slightly declined to ₦11.81 billion from ₦12.25 billion, showing some cost-saving efforts.
3. Increased Trade Payables & Borrowings
- Trade and other payables surged to ₦47.35 billion (2023: ₦24.83 billion), indicating cash flow constraints.
- Interest-bearing loans and borrowings more than doubled to ₦50.41 billion, straining debt servicing capacity.
These financial challenges raise concerns over liquidity and capital adequacy.
Balance Sheet & Financial Stability Challenges
Caverton Offshore’s financial position deteriorated sharply, with a 30.9% decline in total assets and rising debt burden:
- Total Assets: ₦54.82 billion (2023: ₦79.32 billion) ↓30.9%
- Total Equity: ₦(49.68) billion, compared to ₦(747.64) million in 2023.
- Cash & Bank Balances: ₦2.27 billion (2023: ₦20.44 billion) ↓88.9%
- Interest-Bearing Loans & Borrowings: ₦50.41 billion (2023: ₦24.48 billion) ↑106%
- Trade & Other Payables: ₦47.35 billion (2023: ₦24.83 billion) ↑90.7%
The company’s negative equity position highlights its financial strain and urgent need for restructuring.
Management Commentary & Outlook
Caverton Offshore’s management outlined key challenges and future recovery strategies:
- Focus on forex risk management to mitigate future currency-related losses.
- Exploring debt restructuring to ease finance cost burden.
- Enhancing operational efficiency to reduce costs and improve cash flow.
- Diversifying revenue streams beyond core helicopter services to stabilize earnings.
The company must address liquidity concerns and financial restructuring to regain profitability.
Strategic Priorities for 2025
1. Strengthening Financial Risk Management
- Implementing hedging strategies to reduce forex losses.
- Exploring local currency funding options to minimize FX exposure.
2. Debt Restructuring & Capital Optimization
- Seeking lower-cost funding alternatives to reduce interest expenses.
- Negotiating loan repayment extensions to ease cash flow pressures.
3. Operational Efficiency & Cost Reduction
- Optimizing aircraft leasing and fuel procurement to cut costs.
- Improving crew scheduling and maintenance cost efficiency.
4. Expansion into Diversified Revenue Streams
- Growing marine logistics and offshore vessel operations.
- Strengthening oil & gas aviation contracts to secure long-term revenue.
Conclusion
Caverton Offshore Support Group Plc’s 2024 financial results highlight strong revenue growth, but severe foreign exchange losses and rising finance costs resulted in a massive net loss.
- Revenue rose 42.7% to ₦45.64 billion, demonstrating strong business expansion.
- EPS declined 292% to -₦15.08, reflecting heavy financial strain.
- Forex losses soared to ₦43.49 billion, impacting net profitability.
- Debt levels doubled, increasing financial stress.
To return to profitability, the company must prioritize forex risk mitigation, debt restructuring, and cost optimization while exploring new revenue streams beyond helicopter services.
