SembMarine’s 1Q profit down 14 percent

Singapore’s Sembcorp Marine, a company building offshore drilling rigs, has achieved a net profit of $106 million for the three months ended March 31, 2015, which represented a 14% decline compared with $122 million in 1Q 2014.

Group turnover for three months ended March 31, 2015 declined 2% year-on-year to $1.30 billion, which compares with $1.34 billion for the corresponding period in 2014. According to the company, the decline in revenue was due mainly to decline in rig building and repair revenue recognised during the first quarter compared with last year.

In 1Q2015, Group EBITDA declined 4% year-on-year to $169 million, while operating profit fell 7% to $138 million, from $149 million in the previous corresponding period.

At the pre-tax level, Group profit of $135 million was 13% lower than the $155 million achieved in the previous year. Associate and joint venture income declined 32% year on year to $3.9 million.

Turnover for the Rig building sector declined 5% year on year from $796 million to $753 million. The Group delivered the Prosafe accommodation semi-submersible as well as one Hakuryu jack-up rig during the quarter, with another nine rigs in the work-in-progress stage and scheduled for delivery this year.

Offshore and conversion revenue increased 19% from $362 million in 1Q2014 to $431 million in 1Q2015.

Ship repair revenue was 37% lower at $100 million in 1Q 2015 compared with $158 million in the corresponding period in 2014 as average revenue per vessel remained low although the number of ships repaired increased.

Outlook

The ongoing cutback in global exploration and production expenditure has resulted in a scarcity of new orders for the industry this year, SembMarine explains. The company further notes that customers strive to conserve cash and consolidate their offshore fleet operations as charters are not renewed or are renewed at significantly lower rates.

Furthermore, new rigs face the prospect of not securing charters despite their higher technical specifications and superior capabilities. As a result, the Group faces a challenging year ahead, the company concludes.

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