Lower contributions from rig building and higher finance costs helped send third-quarter earnings tumbling at Sembcorp Marine.
Net profit for the three months to Sept 30 plummeted 75.7 per cent to $32.1 million, compared with the same period a year ago.
Revenue dropped 34 per cent to $1.1 billion, also due to lower contributions from rig building. Ship repair revenue also fell.
Another reason is that some of the customers have requested rig deliveries to be deferred. This means that revenue recognition for these contracts has been suspended.
Sembcorp Marine said that low oil prices and an oversupply in the global offshore exploration sector continued to have a negative impact on offshore rig utilisation and charter rates.
AT A GLANCE
$32.1 million (-75.7%)
$1.1 billion (-34%)
This has led to a lack of new charter contracts and the cancellation of existing charters, it said.
Brazil's oil and gas industry remains "fraught in uncertainty", it added.
Despite the depressed market, Sembcorp Marine said it had secured $2.9 billion in new contracts for the year to date for the offshore production market segments. This brought its net total order book to $11.6 billion, it said.
Sembcorp Marine said it had reached a key milestone on July 1 regarding its transformation efforts.
Its business units are now integrated under one brand focusing on four key areas. These areas are rigs and floaters, repairs and upgrades, offshore platforms and, lastly, specialised shipbuilding.
Earnings per share for the three months declined from 6.32 cents last year to 1.54 cents.
Net asset value per share was 143.37 cents as at Sept 30, up from 141.92 cents on Dec 31.
No dividend was declared.
The firm said the immediate operating environment in the offshore rig building industry remained "very challenging".
It added, however, that it remained confident of the long-term fundamentals of the offshore and marine industry.
It also said it believes its investments in new capabilities and facilities will help ensure sustainable returns, both in Singapore and its overseas yards.
Sembcorp Marine shares closed unchanged at $2.54 yesterday. The results were announced after the market closed.