Singapore’s offshore rig builder Sembcorp Marine saw its quarterly profit dive on absence of one-off gain and lower contributions from offshore platforms section despite increase in revenues.
The company on Wednesday posted revenues of $1.18 billion for the three months to March 31, 2018. This compares with $746 million in revenue generated in 1Q 2017.
SembMarine said the higher revenue in 1Q 2018 was largely due to higher recognition on delivery of two jack-up rigs – named Gerd and Gersemi – to Borr Drilling and one jack-up rig to BOT Lease during the quarter.
The company posted 1Q 2018 gross profit of $43 million and operating profit of $20 million. Net profit for the quarter was $5.3 million, an 86% decrease compared with $37 million in 1Q 2017.
The decrease was mainly due to the one-off gain on disposal of Cosco Shipyard Co., Ltd recorded in 1Q 2017; lower contributions from Offshore Platforms; offset by higher profit recognition on rigs delivery in 1Q 2018.
New orders worth $476 million secured in 1Q 2018, bringing our total net order book to $7.71 billion at end March 2018 with completion and deliveries stretching into 2021. This includes the award of TechnipFMC FPSO hull and living quarters contract secured in March.
According to the company, global exploration and production (E&P) spending trend continues to improve due to firmer oil prices in the first quarter of 2018. However, recovery in rig orders is expected to take some time as most of the drilling segments remain oversupplied, with day rates and utilization under pressure.
The offshore production segment has improved with the FID of several projects while the offshore segment for upgrades and repairs remains weak, the company said.
SembMarine concluded that the overall industry outlook remains challenging. Despite improvement in E&P capex spending outlook, it will take some time for this to translate into new orders. Margins remain compressed with intensifying competition. Based on existing orders, overall business volume and activity is expected to remain low, and the trend of negative operating profit may continue.
Offshore Energy Today Staff