Sembcorp Marine Posts Decline in 2Q Net Profit

Singapore-based Sembcorp Marine Ltd.'s second quarter net profit fell 12.5 percent to $97.9 million (SGD 124.9 million), compared to the previous year's $111.9 million (SGD 142.8 million), with the company attributing the decline to the timing in recognition of the rig building and ship conversion/offshore projects.

Sembcorp Marine's revenue for 2Q 2013 was $881 million (SGD 1.124 billion), down 7.6 percent from $953.9 million (SGD 1.217 billion) a year ago.

The company clinched contract orders worth $2.74 billion (SGD 3.5 billion), which excluded repairs, since the start of the year. This has resulted in the company's net order book rising from $9.95 billion (SGD 12.7 billion) as at end 2012 to $11.29 billion (SGD 14.4 billion), with completion and deliveries extending till 2019.

"Demand for rigs is expected to remain strong, however, competition from the Chinese and Korean yards will impact margin ... Despite the challenging shipping market environment, there is continued demand for repairs in the niche segments of LNG (liquefied natural gas) carrier repairs, life extension work and upgrading of offshore vessels and cruise ships," Sembcorp Marine said in a press release.

Meanwhile, the company's Integrated New Yard Phase I Facility at Tuas in Singapore is on track for commercial operations with the first ship scheduled for docking in August 2013. Equipped with 4 VLCC (very large crude carrier) drydocks and more than 2.42 miles (3.9 kilometers) of berthing quays, the new yard will be capable of undertaking FPSO (floating, production, storage and offloading) conversions as well as servicing a wide range of vessels, including VLCCs, new generations of mega containerships, LNG carriers, passengerships, offshore vessels and fixed platforms.

Separately, construction of Estaleiro Jurong Aracruz (EJA), Sembcorp Marine’s integrated new yard facility in Brazil is progressing on schedule. EJA is expected to commence operations in 1Q 2014.

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