Prosafe Job Cuts over Cost Efficiency

Published at 12:40PM - 24/08/16

Prosafe job cuts were announced across the company, following a comprehensive refinancing and cost efficiency measures announced in July.

The semi-submersible accommodation vessels operator will implement a series of lay-offs throughout the remainder of this year, “eventually achieving a substantial headcount reduction across the group”.

“The rationalisation is necessary to ensure that the Prosafe group remains competitive in the current difficult market conditions and in a solid position for future growth when the industry starts to recover,” the company informed in its second quarter report.

Prosafe Job Cuts over Cost Efficiency

As part of the cost efficiency measures reported earlier this year, Prosafe is implementing a new model “based on the principle of a lean line organisation focusing on the core business of safe and efficient management of the fleet”.

With these measures, the group hopes to achieve a reduction in annual costs by at least US$30 to US$40 million (approximately £23 to £30 million).

Prosafe Job Cuts over Cost Efficiency
Safe Jasminia was sold for scrap/recycling in August in the US

Prosafe sees the future of the market with uncertainty. “Although there is a number of prospects, 2017 is expected to be the low point in activity level,” the company stated.

“In general, the company sees the demand returning more to the traditional demand related to maintenance and modification projects with shorter lead times compared to hook-up projects,” it added.

More Projects to Become Economically Viable

Prosafe adds that costs cuts in the exploration and production (E&P) sector are expected to lead to more projects turning economically viable.

“Combined with continued focus on asset integrity and maintenance on offshore installations, the company expects a gradual market recovery from 2018 onwards,” the company stated further.

Prosafe announced an operating profit for the second quarter of 2016 of US$32.5 million (£24.58 million), while fleet utilisation was down to 41% from 58% in the same period last year.

Since mid-March, Prosafe already saw five vessels start new contracts in the UK and Norway with two other vessels fully contracted in the quarter.

Additionally, the company has one vessel in transit to Brazil to perform a contract, two vessels cold-stacked and one preparing for lay-up.

As well as this, three vessels were sold for scrap in the US.