Sembcorp Marine net profit sinks 5%

$143 mllion net profit for the second quarter of 2012 paled from a year before due to revenue timing and lower initial recognition of rig building projects.

Group operating profit in 2Q 2012 was $160 million. This was 1% higher as compared with $159 million in 2Q 2011. At pre-tax level, Group profit at $184 million was 2% higher as compared with $181 million for the same period in 2011.

Group turnover at $1,217 million was 46% higher as compared with $831 million in 2Q 2011.

Sembcorp Marine said the higher turnover was due to the progressive recognition of projects, in particular in the rig building sector which saw turnover increase 66% from $400 million in 2Q 2011 to $664 million for the corresponding period in 2012.

"During the quarter, three more jack-up rigs achieved initial recognition with one unit of semi-submersible rig, the Atwood COndor, delivered to owner ahead of schedule. In comparison, the corresponding period in 2011 saw only two jack-up rigs achieve initial recognition, four turnkey semi-submersible rigs in various proggressive recognition stages and the delivery of semi-submersible rig, Atwood Osprey," said Sembcorp Marine in a release accompanying its 2Q 2012 results.

"The ship conversion/offshore sector registered a 41% increase in turnover at $364 million in 2Q 2012 as compared with $259 million for the same period in 2011. One unit of FPSO conversion project achieved initial recognition with five other projects in various progressive stages of recognition as compared with eight projects in various stages of construction during the same period in 2011. The turnover for the ship repair sector in 2Q 2012 at $179 million was 9% higher as compared with the corresponding period in 2011," it added.

For its outlook, the Group has secured contract orders worth a total of $3.1 billion (excluding ship repair) since the start of the year, growing the Group’s net order book from $5.1 billion as at end 2011 to $6.6 billion, with completion and deliveries extending till 2Q 2015.

"Amid the economic uncertainty and volatile global market conditions, the fundamentals for offshore oil and gas activities remain intact driven by demand for technically advanced, versatile and efficient rigs that are capable of shallow and deepwater drilling. For the deepwater segment, continued growth is expected given the tight supply of deepwater rigs," Sembcorp Marine said.

"Demand for floating platforms and FPSOs is expected to be robust as more discoveries move into development phase. Sembcorp Marine with its strong track record and proven expertise is well-positioned to benefit from the growing opportunities in this sector," it added.

"Despite the challenging shipping market environment, there is continued demand from LNG carriers for repairs and life extension work. Repair and upgrading work for cruise ships and offshore vessels continue to be strong. Demand for the Group’s big docks remains strong given the stable base load and steadfast support from the yards’ Alliance/FCC and long-term customers," it said further.