Sembcorp Marine's 2Q 2015 Net Profit Falls 17% to $79.6M, Revenue Down 10%

Singapore-listed Sembcorp Marine Ltd.'s net profit declined 17 percent in the second quarter of 2015 (2Q 2015) to $79.58 million (SGD 109 million), compared to $96.37 million (SGD 132 million) a year ago, with the weaker performance attributed to industry conditions caused by low oil prices and a sharp fall in global oil and gas capital expenditure, the company said in its quarterly results Wednesday.

"The persistently low oil prices have escalated the ongoing cuts in global exploration and production capital expenditure. Some customers are deferring or seeking to defer the delivery of their ordered rigs on a lack of charter contracts," Sembcorp Marine said in the announcement.

Turnover dipped 10 percent during this period to $882.0 million (SGD 1.208 billion) compared to $979.10 million (SGD 1.341 billion) in 2Q 2014.

Revenue for the first six months of this year dropped 6 percent to $1.83 billion (SGD 2.511 billion), compared to $1.95 billion (SGD 2.676 billion) in the corresponding period last year, while revenue booked for rig building and repair declined, but this was partially offset by a rise in the offshore and conversion segment.

In the first six months of 2015 (1H 2015), Sembcorp Marine said revenue from the rig building sector declined 18 percent year on year to $1.0 billion (SGD 1.38 billion) from $1.22 billion (SGD 1.67 billion), reducing its share of the company's turnover by 7 percent to 55 percent. The firm, one of the two major rig builders in Singapore, indicated that 16 rigs are still under construction at its yard.

Contribution from the ship repair segment registered a 14 percent decline to $194.21 million (SGD 266 million) in 1H 2015 from $224.87 million (SGD 308 million) last year, while Sembcorp Marine's offshore and conversion business posted a revenue of $608.17 million (SGD 833 million), up 27 percent from $479.68 million (SGD 657 million) in 1H 2014.

While the offshore and conversion segment enlarged its share of the company's revenue by 8 percent to 33 percent, the share of the ship repair business shrank marginally by one percent to 11 percent.

Meanwhile, the company's net order book to-date stood at $7.96 billion (SGD 10.9 billion), with deliveries and completion stretching till 2020. This was marginally higher than the $7.74 billion (SGD 10.6 billion) recorded in the previous quarter.

Looking ahead, Sembcorp Marine noted that "while the new order outlook for offshore exploration vessels remains bleak, particularly in the jackup segment which is in an oversupply situation, the Group has benefitted from its strategy to diversify its product offering in addition to drilling solutions."

"Brazil’s oil and gas industry remains fraught in uncertainty. We continue to engage with our customers to find the best way forward for our projects and to explore all options including slowing down construction."


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