Renaissance projects positive market outlook in 2018

Leading Omani multinational, The Renaissance Group, listed on Muscat Securities Market (MSM) as Renaissance Services SAOG, announced its initial un-audited annual financial results for the year ended December 31, 2017.
The group operates two core businesses — Topaz and Renaissance. Topaz operates a modern, young and diverse fleet of 100 off-shore support vessels (OSV) for the oil and gas sector, primarily located in the Caspian and MENA markets.
Renaissance offers strategic and integrated facilities management solutions for businesses in a wide range of sectors and geographies. Renaissance provides contract services, IFM and run the Renaissance Village brand, which is a uniquely designed workforce accommodation solution and Renaissance Duqm Village, which is the largest, state of the art PAC in Oman.
Clients include government, universities and hospitals, ports, industries in diversified sectors, onshore and offshore hydrocarbon development and the military.
Topaz’s market outlook is decidedly more positive going into 2018 compared with 2017, albeit difficult industry conditions are expected to endure in the short term. The Company, however, anticipates a positive trend in the utilisation of its vessels and an improvement in its ability to build further contract cover, it said.
The recovery in oil prices, accompanied by growing utilisation and demand, leads Topaz to believe the Company has passed the peak impairment levels of 2016. In the third quarter, Topaz announced a strategically important contract win with Total in Azerbaijan. The win results from Topaz’s global relationship with Total, established through successfully supporting Total’s operations in West Africa and the Middle East, and this newly established relationship in Azerbaijan shows great promise for further growth.
The $550 million Tengiz project in Kazakhstan is progressing well ahead of schedule within budget. As a result, two vessels have commenced operations earlier than anticipated. The overall construction of the module carrying vessels (MCVs) continues with remaining deliveries scheduled over the coming six months.
Topaz’s strong performance under the contract is expected to further broaden the Company’s opportunities with both Chevron and ExxonMobil. Topaz’s total revenue backlog remains at a market leading $1.5 billion — significantly, $1 billion of this will be invoiced over the coming three years.
This means the company has already secured revenue greater than 2017 in each of the next three years. In addition, the Company has built a very healthy bidding pipeline, underscoring the Company’s more positive outlook.
Renaissance Contract Services has maintained top line and improved bottom line.
The Company’s business strategy is to diversify the range of its services, sectors and geography. While this reduces exposure to the oil & gas industry, the sector remains the dominant player in the Company’s portfolio. So, this business is also not immune to the oil price volatility and the significant increase in cost of doing business in our dominant home market of Oman.
Performance in the Company’s core Facilities Management services businesses, and occupancy in the flagship Renaissance Villages in the oilfields, all remain stable. The Company has absorbed increased cost of doing business in our core markets, off-set by improved efficiency.
Competition in services tenders is fierce with squeezed margins. However, the principal negative effect on performance is the initial loss-making period expected with the build-up of occupancy of our new flagship project Renaissance Village Duqm, the company added.