Sembcorp Marine's 1Q 2015 Net Profit Falls 14% to $79.74M, Revenue Down 2%

Singapore's Sembcorp Marine Ltd.'s net profit for the first quarter of 2015 (1Q 2015) declined 14 percent to $79.74 million (SGD 106 million) compared to $91.79 (SGD 122 million) in the previous year, financial results released by the company indicated Monday.

Turnover for the period was $978.1 million (SGD 1.3 billion), down 2 percent from $1 billion (SGD 1.34 billion) from a year ago, with the decline attributed to a fall in rig building and repair revenue recognized.  

"The ongoing cutback in global exploration and production expenditure has resulted in a scarcity of new orders for the industry this year. Customers strive to conserve cash and consolidate their offshore fleet operations as charters are not renewed or are renewed at significantly lower rates. New rigs face the prospect of not securing charters despite their higher technical specifications and superior capabilities. As a result, the Group faces a challenging year ahead," Sembcorp Marine said in a press release.

Sembcorp Marine reported that revenue from the rig building sector declined 5 percent year on year from $598.91 million (SGD 796 million) to $566.56 million (SGD 753 million). During the quarter, the firm delivered the Prosafe accommodation semisubmersible and one Harkuyu jackup, while another nine rigs -- currently under construction -- are scheduled for delivery later this year. 

Ship repair revenue fell 37 percent to $75.24 million (SGD 100 million) in 1Q 2015 compared to $118.88 million (SGD 158 million) in the corresponding period last year. The firm revealed that the average revenue per vessel remained low although the number of ships repaired increased.

In contrast to shrinking revenue experienced by the rig building and shipbuilding sectors, income from the offshore and conversion segment grew 19 percent to $324.24 million (SGD 431 million) in 1Q 2015 from $272.33 million (SGD 362 million) a year ago. 

Rig building remained the largest contributor to the company's revenue, accounting for 58 percent of the total, followed by offshore and conversion segment at 33 percent, ship repair at 8 percent and others at 1 percent.