Earnings plunged around 90 per cent in the second quarter at Sembcorp Marine as customers opted to defer rig deliveries in the wake of the oil price collapse.
The firm posted a net profit of $11 million in the three months to June 30, a stark difference from the $109 million posted in the same quarter a year earlier.
Rig deferments were just part of the story. Currency conversion losses to the tune of $32 million, higher finance costs and an impairment loss of $8 million also dragged down the rigbuilder's bottom line.
If foreign exchange effects from the weaker greenback and pound were stripped out, operating profit in the quarter would have been higher than the first quarter, said chief financial officer Tan Cheng Tat yesterday. The drop in revenue was less severe, down 25 per cent to $908 million.
While turnover from offshore platforms and floaters rose, the overall figure was dragged down by lower takings from rigbuilding and ship repairs.
Earnings per share stood at 0.55 cent, down from 5.23 cents a year ago, while net asset value per share was 120.29 cents as at June 30, up from 120.24 cents as at Dec 31.
AT A GLANCE
$908 million (-25%)
$11 million (-90%)
INTERIM DIVIDEND PER SHARE
1.5 cents (-62.5%)
SembMarine reported an operating cash flow of $175 million in the first half before working capital changes, down 53 per cent from the first half last year.
But the group noted that it generated a further positive operating cash flow of $909 million this month, after delivering the $550.8 million Noble Lloyd Noble jack-up rig as well as other projects.
It has proposed an interim cash dividend of 1.5 cents a share, down from four cents a share in the first half of last year.
SembMarine's net order book stood at $9.2 billion as at June 30, with most booked in progress payment terms rather than back-ended ones. Excluding projects from embattled Sete Brasil, the net order book stood at $6 billion.
Chief executive Wong Weng Sun said the group will continue to "optimise its manpower requirements" as it moves away from drilling rig construction, for which demand is low, towards non-drilling segments.
SembMarine has shed 6,000 workers from its peak in mid-2014.
Asked if the fallout from the winding up of offshore services firm Swiber Holdings might impact SembMarine's bank borrowing, Mr Tan said: "I don't think it's fair to compare us to Swiber; we are not exactly in the same space."