SembMarine posts Q2 net loss of $55.6m

Sembcorp Marine's shipyard in Jurong. The group has commenced the third development phase of the Tuas Boulevard Yard. Chief executive Wong Weng Sun said the incremental developments are timed with the requirements of incoming projects and are being u
Sembcorp Marine's shipyard in Jurong. The group has commenced the third development phase of the Tuas Boulevard Yard. Chief executive Wong Weng Sun said the incremental developments are timed with the requirements of incoming projects and are being undertaken to reduce production cost.PHOTO: REUTERS

Excluding rig sales, turnover would have been $572m, down 12% on second quarter of 2017

Sembcorp Marine posted a net loss of $55.62 million for the second quarter on the realised loss from the sale of a semi-submersible rig and lower overall business volume.

It was a reversal from a net profit of $5.12 million for the same quarter last year, it reported yesterday.

Loss per share for the three months to June 30 was 2.66 cents, compared with earnings per share of 0.24 cent a year earlier.

Revenue was $1.63 billion, up 150.8 per cent from the restated turnover of $648.85 million, mainly on delivery of two jack-up rigs to Borr Drilling and the sale of the West Rigel semi-submersible rig.

Excluding these rig sales, turnover would have been $572 million, down 12 per cent on the second quarter of last year.

The first-half loss was $50.31 million compared with a net profit of $42.16 million last year.

The group secured $730 million worth of engineering, procurement and construction (EPC) projects for the production segment in the first half, with oil companies green-lighting more upstream projects as crude prices stabilised in the healthier band of US$60 to US$75.

Chief executive Wong Weng Sun said the move to take on engineering, procurement and construction projects is part of the group's efforts at scaling up the offshore and marine value chain. This is made possible by the enlarged capacity offered by its mega Tuas Boulevard Yard that is being developed in phases.

However, president and chief executive Wong Weng Sun noted that corresponding revenue from these projects will mainly be recognised when they enter construction phase. That will come after the completion of detailed engineering and construction planning, which typically spans six to 12 months.

Consequently, SembMarine has seen its revenue excluding the Borr Drilling and West Rigel rig sales contracting year on year in the second quarter and the first six months.

But Mr Wong said the move to take on EPC projects is part of the group's efforts at scaling up the offshore and marine value chain. This is made possible by the enlarged capacity offered by its mega Tuas Boulevard Yard that is being developed in phases.

SembMarine also booked a loss on the US$500 million (S$682 million) sale of the West Rigel rig but Mr Wong said it is with the completion of this transaction that the yard group has "fully monetised" its entire inventory of 10 rigs.

  • AT A GLANCE

  • REVENUE: $1.63 billion (+150.8%)

  • NET LOSS: $55.6 million (comparison not meaningful)

The firm did not provide any update on the proceedings of the anti-corruption probe implicating a party connected to entities engaged by the yard group's subsidiaries.

Mr Wong added that the group's $329 million provisions made for its Sete Brasil contracts "remain adequate under the present circumstances".

SembMarine has commenced the third development phase of the Tuas Boulevard Yard. Mr Wong said the incremental developments are timed with the requirements of incoming projects and are being undertaken to reduce production cost. The aim is for SembMarine "to vacate as soon as possible" its Tanjong Kling premises.

The firm will not be paying out an interim dividend, as a prudent measure "to conserving cash in the light of the challenging business environment". It paid out an interim dividend of one cent a share last year.

A version of this article appeared in the print edition of The Straits Times on July 21, 2018, with the headline 'SembMarine posts Q2 net loss of $55.6m'. Print Edition | Subscribe