Sembcorp Marine Sails Out of 3Q with 73% Earnings Increase

Sembcorp Marine has reported a strong 3Q 2008 growth with increased earnings of 73% to $140.9 million. This increase was achieved on a group turnover of $1,144.2 million.

Group operating profit increased 92% to $142.1 million in 3Q 2008 from $74.1 million in 3Q 2007. Group pre-tax profit increased by 88% to $180.9 million from $96.4 million in 3Q 2007. The increase is mainly attributable to higher operating margins from rig building and ship repair businesses and better contribution from associated companies.

On a nine-month period basis, Group turnover increased by 9% to $3,446.5 million from $3,176.4 million in 9M 2007.

Group operating profit increased by 50% to $333.1 million in 9M 2008 from $222.2 million in 9M 2007. Group pre-tax profit increased by 59% to $456.8 million from $287.7 million in 9M 2007. The increase is attributable mainly to higher operating margins from the rig building and ship repair businesses and better contribution from associated companies.

Group attributable profit grew by 50% to $360.5 million from $240.2 million in 9M 2007.

Outlook

The current global financial outlook and economic conditions are challenging. The Group however has a strong net order book of $9.9 billion comprising rig building, ship conversion and offshore projects. This includes new orders of $5.5 billion secured since January 2008. These projects will provide the Group with a solid base-load, and will keep our shipyards busy with progressive completion and deliveries from 4Q 2008 until 2012.

The Group is in a strong net cash and balance sheet position and expects the current year’s overall performance to be stronger than FY 2007. For the future, we expect ship repair demand to remain strong amid global tightness in yard capacity and support from our long-term customers. Fundamentals for the offshore sector remain intact. In the long term, exploration and production (E&P) activities will continue, in order to replace declining global oil and gas reserves and to increase production.

The replacement of the ageing world rig fleet and the demand for deepwater units should resume when the global financial crisis abates and economic conditions improve.

Although the current financial turmoil has a dampening impact on world economy and global demand for oil, the Group is confident that the long-term fundamentals and outlook for the marine and offshore industry remain positive.

 

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