Sembcorp Marine's first-quarter earnings nearly halved as project deferments caused by the oil price slump again took a heavy toll, along with a steep jump in finance costs.
Net profit for the three months to March 31 sank 48.2 per cent to $54.8 million, the world's second biggest rig-builder said yesterday.
Revenue slid 29.6 per cent to $918.4 million, largely owing to "lower revenue recognition for rig building projects resulting from customer deferment requests and customer restructuring".
Swiss offshore drilling contractor Transocean, for instance, said last week it had agreed with SembMarine unit Jurong Shipyard to defer delivery and related final payments of two ultra-deepwater drillships.
The two drillships are now scheduled to be delivered during the first and third quarters of 2020.
AT A GLANCE
NET PROFIT: $54.8 million (-48.2%)
REVENUE: $918.4 million (-29.6%)
DIVIDEND PER SHARE: N.A.
SembMarine has taken $609 million in provisions for rig delivery deferments and cancellations - including a $329 million charge for its projects for Brazilian oil rig supplier Sete Brasil, which has not paid the company for orders worth billions since November 2014.
Still, SembMarine chief executive Wong Weng Sun said in a statement the provisions remain "sufficient under the present circumstances".
Finance costs during the quarter rose steeply by 87.4 per cent to $17.9 million, on the back of higher interest expense from higher bank borrowings.
Earnings per share sank from 5.07 cents to 2.63 cents, while net asset value per share stood at 122.18 cents as at March 31, up slightly on the 120.24 cents as at Dec 31.
SembMarine, which has seven drillships worth US$7 billion (S$9.5 billion) for Sete Brasil on its order books, commenced arbitration proceedings against Sete Brasil's various subsidiaries last week, after the company's shareholders voted to file for bankruptcy protection.
The rig-builder has also said it will pursue its claim against Marco Polo Marine regarding a jack-up rig construction contract for its unit Marco Polo Drilling, which had failed to pay the second payment of 10 per cent of the contract price, amounting to US$21.4 million, by Nov 30 last year.
Mr Wong noted that the ongoing down-cycle in the industry is "likely to be more protracted than in previous cycles". He said: "The group continues to take necessary measures to overcome these challenges, and also lay stronger foundations for the future when the market recovers."
In terms of headcount, SembMarine has re-allocated a significant number of workers to its non-drilling segments, where production activities remain high, while allowing for "natural attrition and (the) removal of less efficient sub-contractors", said Mr Wong.
He said the Estaleiro Jurong Aracruz yard in Brazil may see further headcount reduction, given the latest Sete Brasil developments.
During the quarter, SembMarine won $60 million in new orders, bringing its net order book to $9.7 billion, with deliveries extending into 2020.
SembMarine shares closed half a cent or 0.3 per cent lower at $1.67 yesterday, before the results were announced.