SembMarine posts 48% slide in Q1 earnings

Sembcorp Marine's net profit for the three months to March 31 sank 48.9 per cent to S$55.6 million.
Sembcorp Marine's net profit for the three months to March 31 sank 48.9 per cent to S$55.6 million.PHOTO: SEMBCORP MARINE

SINGAPORE - Project deferments and higher finance costs continued to take a toll on Sembcorp Marine's first-quarter earnings.

The rig-building giant announced on Wednesday that net profit for the three months to Mar 31 sank 48.2 per cent to S$54.8 million - well down from the S$105.9 million in the same period a year ago.

Revenue slid 29.6 per cent to S$918.4 million on the back of "lower revenue recognition for rig-building projects resulting from customer deferment requests and customer's restructuring".

Switzerland-based offshore drilling contractor Transocean, for instance, said last week that it had agreed with Jurong Shipyard, a unit of SembMarine, to defer the delivery and related final payments of two ultra-deepwater drillships.

Still, SembMarine chief executive Wong Weng Sun said in a statement that the S$609 million in provisions it had already set aside for rigs, including S$329 million for the projects for beleaguered Brazilian rig-building firm Sete Brasil, remain "sufficient under the present circumstances".

Finance costs rose by a steep 87.4 per cent to S$17.9 million, given the higher interest expense from higher bank borrowings compared with the same period in the year before, said SembMarine.

Earnings per share for the quarter sank 48.1 per cent to 2.63 cents, while net asset value per share stood at 122.18 cents as at Mar 31, up slightly on the 120.24 cents as at Dec 31.

SembMarine shares closed half a cent or 0.3 per cent lower at S$1.67 on Wednesday, before the results were announced.

tsjwoo@sph.com.sg

NOTE: The previous version of the story wrongly mentioned net profit sank 48.9%. We are sorry for the error.