Sembcorp Marine’s net profit plunges 13% to $752m in 2011

As its rig building projects weren’t so profitable in 2011.

According to a financial statement, the group’s net profit was 13% lower than in 2010 with earnings per share at 36.13 cents. Return on equity was 30%.

Group turnover at $3,960 million was 13% lower compared with that in 2010. This was attributable to the timing, number and value of the projects in varying progressive revenue recognition stages in the three different sectors of rig building, ship conversion & offshore and ship repair.

For the rig building sector, revenue was down 28% from $3.05 billion to $2.21 billion. Three turnkey semi-submersible rigs and two non-turnkey semisubmersible rigs, the resumption of revenue recognition on delivery of Petro Rig III semi-submersible rig and the sale of a CJ-70 harsh environment jack-up rig contributed to the higher turnover in 2010.

In comparison, 2011 saw seven of a total of thirteen new jack-up rigs achieving revenue recognition and one unit semi-submersible rig, the Songa Eclipse resuming revenue recognition upon completion and delivery in 3Q.

The ship conversion and offshore sector registered a 31% increase in revenue from $820 million to $1,073 million. The sector saw a total of five deliveries with six other projects in varying stages of construction and five units in the planning stage.

Ship repair revenue in 2011 was $644 million, comparable to the $646 million previously achieved. 264 vessels were repaired with an average value of $2.44 million per vessel.

Group operating profit at $737 million was 22% lower as compared with $943 million due mainly to fewer rig projects especially semi-submersible rigs. The lower operating profit in 4Q 2011 was due mainly to the margin recognition of the initial few units of the newly launched designs for rig building projects as compared to the higher margin recognition from the repeated rig building projects in 4Q 2010.

Group pre-tax profit at $860 million was lower by 20% as compared with $1,078 million in 2010.

Group net profit for 2011 at $752 million was 13% lower as compared with $860 million in 2010 due to lower operating profit from rig building projects as well as the receipt of the full and final amicable settlement of the disputed foreign exchange transactions with Societe Generale in 2010. This was offset by the higher interest income received in 2011 for deferred payment granted to customers and write-back of prior years’ tax over-provisions.

4Q 2011 versus 4Q 2010
On a quarterly basis, Group net profit at $229 million was 4% lower as compared with $239 million for the corresponding period in 2010. The lower net profit was attributable mainly to lower operating profit from rig building projects.

Group turnover at $998 million was 2% higher as compared with $983 million registered in 4Q 2010. The higher turnover was due mainly to revenue recognition from ship conversion and offshore projects, offset by lower revenue recognition from rig building projects.

Group operating profit at $201 million was 33% lower as compared with $298 million in 4Q 2010. The lower operating profit in 4Q 2011 was due mainly to the margin recognition of the initial few units of the newly launched designs for the rig building projects as compared to the higher margin recognition from the repeated rig building projects in 4Q 2010.

Group pre-tax profit at $223 million was 29% lower as compared with $314 million for the corresponding period in 2010.