Singapore's Sembcorp Marine has posted a 5% on-year drop in its 2Q net profit ending June 30, 2012, to SGD143 million ($114 million).
The marine and offshore engineering group said in a statement late Thursday that its drop in net profit was due to the timing in recognition of projects, the number of projects that achieved initial recognition, and the value and design of the rig building projects.
"The company's net profit came in lower than our expectations. But we attribute the variance to timing of revenue recognition and not underperformance," Maybank Kim Eng's analyst Yeak Chee Keong told Rigzone on Friday.
The group's operating profit improved one percent to $128 million (SGD160 million), as compared with $127 million (SGD159 million) in the same period last year.
Sembcorp Marine also saw its revenue increase by 46 percent to $1 billion (SGD1.2 billion) as compared to the same period last year. Sembcorp Marine's rig building, and ship conversion or offshore sectors contributed heavily to the increase in the company's revenue.
Amid the economic uncertainty and volatile market conditions, Sembcorp Marine said that "fundamentals for offshore oil and gas activities remain intact driven by demand for technically advanced, versatile efficient rigs that are capable of deepwater drilling".
The company added that demand for floating platforms and FPSOs is expected to be robust as more discoveries move into development phase. Sembcorp Marine also expects continued demand for liquefied natural gas carriers for repairs and life extension work despite the challenging shipping market.
"Moving forward into 2H 2012, we expect the company's margins to improve with more ship repair jobs, variation orders for projects near tail-end and more aggressive recognition," Yeak remarked.
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