Sembcorp Marine remains in the black

A floating production, storage and offloading vessel in Jurong Shipyard. Sembcorp Marine noted that oil prices are more stable, and global exploration and production spending is expected to rise this year.
A floating production, storage and offloading vessel in Jurong Shipyard. Sembcorp Marine noted that oil prices are more stable, and global exploration and production spending is expected to rise this year.PHOTO: REUTERS

Rigbuilder cautiously optimistic about business outlook amid stabilising oil prices

Sembcorp Marine again posted a profit in the first quarter after its massive earnings turnaround in the fourth quarter, and issued a "cautiously optimistic" outlook on its business amid stabilising oil prices.

The rigbuilder said net profit for the first quarter fell 27.9 per cent from the same period a year earlier, but it still managed to stay in the black at $39.6 million.

Revenue for the three months ended March 31 dropped 17.2 per cent year on year to $760 million, as turnover in its rigs and floaters business declined 36 per cent from a year ago.

Its repairs and upgrades business also booked lower revenue, amid fewer orders for ship repair, although average revenue per vessel rose, with an improved vessel mix with more higher-value works.

The offshore platforms business fared better, with revenue rising 16 per cent year on year in the first quarter.

Sembcorp Marine has been hit hard by the dearth of rig orders amid a collapse in oil prices in the past couple of years.

  • AT A GLANCE

    NET PROFIT:

    $39.6 million (-27.9%)

    REVENUE:

    $760 million (-17.2%)

Last year, its full-year revenue dropped to $3.54 billion - the lowest since 2006.

But the firm noted that oil prices appear to have stabilised and global exploration and production spending is expected to rise this year.

"Inquiries for non-drilling solutions continue to be encouraging. We are cautiously optimistic about new orders for production facilities in the next few years," it said in a statement yesterday.

Customer interest in its broad-based liquefied natural gas solutions and capabilities remains strong, as global demand for gas is on the rise, it added.

"We are making steady progress in the development and commercialisation of our Gravifloat technology for near-shore gas infrastructure solutions. However, it will take time for such efforts to translate into orders."

In the meantime, the firm said its strategy and focus remain anchored on strengthening and optimising its talent pool, pursuing operational excellence in executing projects investing in new capabilities, products and technological innovation to help grow its order book and prudently managing financial resources to preserve financial flexibility and ensure the overall sustainability of its business.

Earnings per share fell to 1.89 cents in the first quarter, from 2.63 from the same period a year ago.

Net asset value rose to $1.2412 per share, from $1.2262 at the end of December last year.

Sembcorp Marine shares ended the day half a cent lower at $1.73 before the release of the results.

A version of this article appeared in the print edition of The Straits Times on April 28, 2017, with the headline 'Sembcorp Marine remains in the black'. Print Edition | Subscribe