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Sembcorp Marine Sees Profit Dip, Admits 2012 Challenging Year

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Sembcorp Marine posted late Thursday a net profit for the final quarter of 2012 at $135 million (SGD167 million), down 27 percent from the same period last year. In 4Q 2011, Sembcorp Marine booked a net profit of $185 million (SGD229 million).

Operating profit for the quarter was $120 million (SGD 148 million), down 26 percent from one year ago.

Sembcorp Marine also saw its net and operating profits slide on a full year basis. For the year ended Dec. 31, 2012, the company posted a net profit of $435 million (SGD 538 million) and an operating profit of $448 million (SGD 554 million), down 28 percent and 25 percent respectively.

Sembcorp Marine noted in its earnings release that it was operating in a challenging environment last year. The company ended last year having to grapple with the aftermath of an offshore accident; the Noble Regina Allen (400' ILC jackup) tilted during a jacking system test Dec. 3, 2012. The incident led to some 89 workers being injured.

Sembcorp Marine revealed in its earnings report that the company has a net order book of $11 billion (SGD 13.6 billion) with completion and deliveries stretching into 2019.

"Amid the fragile global environment, the long-term industry fundamentals for the Offshore Oil and Gas sector remain sound underpinned by high oil prices and projected increases in offshore exploration and production spending," Sembcorp Marine said in a statement.

"Yard activity level will remain high over the next two years, supported by Sembcorp Marine's $11 billion net order book. However, margins may continue to normalize. In this rig order cycle, price increase is slower and we believe this is attributed to rising competition for offshore orders," OSK Research's analyst Jason Saw said in an opinion statement.

"The jackup rig replacement theme is still intact but this market segment will see competition from Chinese and Middle East yards," Saw noted.

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