(Extracted from Annual Report 2015)
The cut in capital expenditure of upstream companies resulted in prolonged, depressed demand for offshore vessels, shipbuilding and subsea services. It was a challenging year to secure chartering orders and maintain fleet utilisation, and it required us to be persistent and pragmatic in terms of business and fleet planning. We reported a 31.3% decline in total external revenue to US$244.4 million for the Group. Otto Marine's tenacious team will continue to strive to optimise our business strategy and financial position in a volatile market.
Since we revamped the strategy to focus on offshore chartering business in 2011, the chartering segment has played an increasingly significant role, contributing to more than 80% of the Group's FY2015 revenue. Over the years, we have expanded our fleet to include vessels that are fuel efficient and capable for a variety of operations.
Our vessels support the entire oil and gas project life cycle and cater to the development, commissioning and production decommissioning stages. Hence, we were able to mitigate the impact of the slowdown in exploration activities in the upstream side. Our fleet are also deployed in other oil and gas projects like dredging, construction etc.
We aim to create a long-term foothold in high-potential markets, including those protected with the cabotage framework. With the pre-qualification with E&P majors, we gradually build our strong customer network around the world. We established Southeast Asia, Australia and North Sea as our primary markets, and Africa and Mexico as our secondary markets. This global presence has effectively mitigated the impact of the business downturn in a single market. While we continue to secure projects in Australia for our chartering fleet, we strive to strengthen our customer base in other parts of the world.
Otto Marine started off with shipbuilding business, delivered a series of flagship vessels in the past years and accumulated extensive experience in the construction of high-specification offshore vessels. As a complement to our offshore chartering business, our shipyard has the capabilities of providing ship repair and maintenance and conversion, fabrication to our customers. At the same time, the Shipyard also takes shipbuilding orders from the Indonesian cabotage market.
Since the inclusion of subsea services to our business offering in 2010, we started to offer long-term vessel solutions to clients to support their subsea contracts with the oil majors and first-tier contractors, especially in strategic niche segments in Gulf of Mexico, Australia and the North Sea.
Otto Marine has a vision to grow into a prominent player with outstanding capabilities in the offshore chartering space. Over the past four years, we upheld the vision and made remarkable progress. Whilst market conditions turned against us, we optimised the fleet size, deployed forward planning, strengthened our customer networks, ensured on-time delivery and enhanced Otto Marine's reputation as a trusted business partner.
Although oversupply ensues and oil inventory is still being built up, it is generally believed that the current oil prices are not sustainable for the long term. The investment cuts by upstream companies have raised concerns on insufficient capacity and infrastructure to meet future demand. We are confident that the demand for our chartering and subsea businesses will recover as the capital expenditure and production activities start to increase. We remain confident of the medium and long-term outlook of the industry.
As part of the Board Member rotation, Mr Heng Hock Cheng @ Heng Heyok Chiang and Garrick James Stanley will retire as Directors from the Board. It has been our honour to have Mr Heng on board and I would like to express my gratitude for his guidance and invaluable contribution to the Otto Marine Group. I would also like to thank Garrick for his dedication and knowledge he has imparted to the Board during his tenure. Garrick will continue his service as the CEO of GO Marine Group.
Both Michael, the Group CEO since April 2015, and Garrick, have done a remarkable job in their respective roles. We look forward to both Michael and Garrick as the continuing formidable force in driving the Group towards long-term growth.
I would like to extend my sincere appreciation to all our staff and management for your dedication and support throughout the challenging times, and to our directors for your contribution all the way. I would also like to extend my sincere gratitude to our business partners and stakeholders for your continued support and trust in Otto Marine. I look forward to developing the business relationships to another level in the years to come.
Finally, I would like to send my heartfelt thanks to our shareholders and investors. Otto Marine will be strengthened through adversities and will continue to strive for the best possible performance as a return for your continued trust and support.
Yaw Chee Siew