Sembcorp Marine has reported a 3% increase in net profit from $119 million in 1Q 2013 to $122 million in 1Q 2014.
Group turnover for the first quarter of 2014 registered a 27% year on year increase to $1.34 billion as compared with $1.05 billion for the corresponding period in 2013. The increase came mainly from higher revenue recognition from rig building activities and offshore platform projects.
Group EBITDA (earnings before interest, tax and depreciation) increased by 5% year-on-year to $176 million, while operating profit increased by 4% from $143 million in 1Q 2013 to $149 million in 1Q 2014. This was despite a 28% decline in other operating income to $12.4 million from $17.3 million. At pre-tax level, Group profit of $156 million was 5% higher than the $149 million achieved in the first quarter of last year. This was supported by higher income from associates and joint ventures which grew 15% to $7.1 million from $6.2 million previously.
The Group has a net order book of $12.9 billion with completion and deliveries stretching into 2019. This includes the $1.6 billion in new rig orders secured since the start of 2014, but excludes repair and upgrade contracts.
Long term fundamentals driving the offshore exploration and production (E&P) market remain stable, underpinned by firm oil prices. The Transocean contract to build two Jurong Espadon III, our proprietary design drillship, is a strong endorsement of the Group’s strategy to deepen, broaden and strengthen our product offering to capture this growing market segment. In a competitive industry landscape, the Group will focus on operational efficiency, productivity improvements, safety management and the timely delivery of orders to our customers.
Since Phase 1 of the Sembmarine Integrated Yard @ Tuas started operations on August 2013, demand for the four big VLCC docks continues to be strong. With its broad range of capabilities and leading edge technology, the new yard will position the Group for long term sustainable growth. The yard has attracted a good range of alliance and new customers as services continue to be ramped up. The Integrated Yard has dry docks totalling 1.55 million dwt and 3.9 kilometres of finger piers and basin quays, and is capable of servicing a wide range of vessels, including VLCCs, new generations of mega containerships, LNG carriers and passenger ships.
Construction on Estaleiro Jurong Aracruz, Sembcorp Marine’s wholly owned shipyard in Brazil, continues to progress well and remains on track to start initial operations in 2H 2014, and is scheduled for completion in 2015.
While enquiry levels remain healthy, competition is keen and intense, exerting pressure on margins.