The lack of one-off gains undermined results at Sembcorp Marine in its first quarter despite revenue shooting up. The firm also noted yesterday that with overall business volume remaining low, negative operating profits may continue.
First-quarter net profit plunged 85.7 per cent to $5.3 million from the previous year, mainly due to the absence of the gain on disposal of Cosco Shipyard that the group recorded a year earlier.
It also received lower contributions from offshore platforms, though this was offset by higher profit recognition on rigs delivery.
Revenue for the three months to March 31 rose 58.3 per cent to $1.18 billion from the previous year. This was due to higher turnover recognition for rigs and floaters after the delivery of two jack-up rigs to Borr Drilling and one to BOT Lease, said SembMarine.
Earnings per share sank to 0.25 cent from 1.77 cents a year earlier, while net asset value per share came in at 115.68 cents, compared with a restated 116.81 cents as of Dec 31.
The group secured new orders worth $476 million in the first quarter, bringing its total order book to $7.71 billion as of March 31. Excluding the Sete drillship contracts, the net order book stands at $4.59 billion.
AT A GLANCE
REVENUE: $1.18 billion (+58%)
NET PROFIT: $5.3 million (-86%)
President and chief executive Wong Weng Sun said the firm continues to engage with Sete Brasil on its restructuring plan, adding that the $329 million of provisions it made for the Sete Brasil contracts remain sufficient under current circumstances.
He told a briefing yesterday that while overall sentiment and capital expenditure in the offshore oilfield exploration sector have begun to improve, it will take time for this to translate into new orders.
"Margins remain compressed with intensifying competition," he said. "Based on existing orders, overall business volume and activity are expected to remain low, and the trend of negative operating profit may continue."
SembMarine shares closed down four cents to $2.23 yesterday, before the results announcement.