Sembcorp Marine plunges into the red with $290m net loss in FY15

Blame massive provisions for deferred rigs.

Singapore’s second-largest rig builder posted a $290 million net loss in FY15. Although the group posted net profits of $384 million, this was all but wiped out by the group’s hefty provisions for rigs which are still under construction.

The group set aside $609 million in impairment and provisions for rig contracts, including $329 million for Sete Brasil projects. Sembcorp Marine also set aside $192 million for associate/joint venture losses.

The group also said that its earnings were depressed by customer requests for deferment for jackup rigs, which resulted in lower margin recognition for rig building projects.
The group’s full-year revenue totalled $4.97 billion, down 15% from FY 2014’s $5.83 billion.

Sembcorp Marine warned that the current oil price downcycle is expected to be more protracted than previous cycles, but said that it remains well-positioned to ride out the downturn.

“Several of our customers have requested for delivery deferments in light of delays in chartering out their rigs. Given the current depressed environment in the upstream sector, we have tried to accommodate their requests, while preserving our commercial interests,” Sembcorp Marine said.

The group also added that apart from its legal tussle with Marco Polo Marine, the rest of its completed rigs with deferment requests have all been technically accepted by its customers.

“The Group remains optimistic on the longer term prospects of its business as its facilities have been built to cater to the industry’s demand for the long term. As an integrated Sembcorp Marine, we will optimise our capabilities and capacities, as well as increase our efficiency and productivity to better serve our partners and customers,” Sembcorp Marine said.