Higher raw material and leasing costs have squeezed first-half margins at China Oilfield Services Ltd (COSL), but the company expects to make up ground in the second half.
The H share, the mainland's largest offshore oilfield services provider, yesterday posted a 38.6 per cent rise in first-half net profit to 453.13 million yuan. Turnover grew 25.1 per cent to 1.79 billion yuan.
Excluding rebates of 129 million yuan on last year's corporate income tax and 46 million yuan rebates recorded in last year's first half on income tax for 2002, the year-on-year interim net profit gain was about 15 per cent.
First-half earnings before interest and tax (ebit) were 424 million yuan, compared with 377 million yuan in the year-earlier period. However, the ebit profit margin fell to 23.6 per cent from 26.3 per cent, chief financial officer Wu Mengfei said.
'Although the margin has fallen year over year, one should remember that last year's full-year margin was only 18 per cent,' he said. 'There are some seasonal fluctuations.'
COSL's drilling operation, which accounted for 44.4 per cent of its first-half turnover, saw the operating margin decline to 32 per cent from 39 per cent from a year earlier. Mr Wu attributed the fall to higher raw material costs and leasing fees for drilling vessels.