Sembcorp Marine's 3Q 2015 Net Profit Down 76% to $23.1M, Rig Revenue Falls

Singapore-listed Sembcorp Marine Ltd. registered a net profit of $23.1 million (SGD 32 million) for third quarter 2015, down 76 percent from the previous year's $95.3 million (SGD 132 million) due mainly to lower contributions from rig building, losses from associates, higher interest expense and non-operating items (mainly impairment charge), the company said in its quarterly results released Thursday.

Turnover for 3Q 2015 was $793.9 million (SGD 1.1 billion), 34 percent less than $1.2 billion (SGD 1.7 billion) previously, with the decline attributed to the reduction of rig deliveries in the quarter as well as lower ship repair revenue, which was partially offset by higher contributions from its offshore platforms business.

"Some of the Group’s jackup customers have requested for delivery deferment of their rigs which has resulted in the suspension of revenue recognition for several rig building contracts. Customer’s restructuring has also contributed to the lower revenue recognition," Sembcorp Marine said in the press release.

The company posted a 17 percent year-on-year decline in revenue from $3.2 billion (SGD 4.4 billion) to $2.6 billion (SGD 3.6 billion) for the nine months to September, while net profit fell 36 percent to $178.2 million (SGD 247 million) from $278.5 million (SGD 386 million) in the previous corresponding period.

During the first nine months of 2015, revenue from its Rigs & Floaters business was $1.8 billion (SGD 2.5 billion), a 21 percent decline from the $2.2 billion (SGD 3.1 billion) booked in the previous corresponding period. The firm delivered three rigs in the nine months, down from six a year ago. Revenue from the firm's Offshore Platforms segment shrank 4 percent year on year from $554.8 million (SGD 755 million) to $521 million (SGD 722 million). Meanwhile, despite an increase in the number of ships repaired, the Repairs & Upgrades business revenue fell 15 percent from last year from $335.5 million (SGD 465 million) to $286.5 million (SGD 397 million) due to lower average revenue per vessel.

Rigs & Floaters remains the largest sector in Sembcorp Marine, accounting for 68 percent of total revenue, while Offshore Platforms and Repair & Upgrades contributed 20 percent and 11 percent, respectively, with Others holding the remaining 1 percent.

Turning to its net order book, the company noted that it has secured $2.01 billion (SGD 2.9 billion) in new contracts year-to-date for the offshore production market segments despite the depressed market, bringing the total to $8.4 billion (SGD 11.6 billion). Among the orders include an engineering, procurement and construction (EPC) contract worth $1 billion from Maersk Oil North Sea UK Ltd., a contract to design and build a new semisubmersible crane vessel for Heerema Offshore Services B.V. for around $1 billion and a $56 million floating storage and offloading (FSO) conversion contract with Teekay Offshore. Deliveries and completion of all outstanding orders stretches out to 2020.