Sembcorp Marine is back in the black for Q3 2017 with the help of tax credit, forex gain

Marine and offshore engineering group Sembcorp Marine turned in a net profit of $2.7 million in the third quarter, against a $21.8 million loss in the same period the previous year.
Marine and offshore engineering group Sembcorp Marine turned in a net profit of $2.7 million in the third quarter, against a $21.8 million loss in the same period the previous year. PHOTO: SEMBCORP MARINE

SINGAPORE - Marine and offshore engineering group Sembcorp Marine was back in the black in the three months to Sept 30, it said on Tuesday (Oct 31).

It turned in a net profit of $2.7 million in the third quarter, against a $21.8 million loss in the same period the previous year.

This swing into profitability was thanks to a lower share of losses from associates and joint ventures, the company said, as well as a tax credit of $3.4 million and foreign exchange gain on greenback borrowings for Brazilian operations.

Still, operating profit came in lower, even as turnover dropped by 64.3 per cent to $316.9 million - a decline due to lower revenue recognition on rig building and offshore platform projects.

Earnings per share turned around to 0.13 cents from a loss per share of 1.04 cents a year before.

Net asset value stood at 120.60 cents a share, down from 122.62 cents as at Dec 31, 2016.

SembMarine noted that it sees signs of a recovery in the drilling segment as global exploration and production spending improves.

It said that it has seen recent stabilisation in day rates and utilisation levels for drilling rigs, on top of an increase in secondary rig sale activity.

The company sealed a deal in October to sell nine jack-up rigs for US$1.3 billion (S$1.77 billion) to Norway's Borr Drilling, after a subsidiary ended building contracts with Oro Negro for three such rigs.

The write-down of S$12.7 million was made in the third quarter.

SembMarine also reported "encouraging" enquiries for non-drilling solutions and added that works on liquefied natural gas carriers and cruise ships are also expected to underpin performance in its repairs and upgrades segment.