Sembcorp Marine profit up 28% to $176mln

Said increase was for the second quarter but Group's turnover down 27% while operating profit was 21% higher and pre-tax profit rose 26%.

Sembcorp Marine achieved a 28% increase in net profit to $176.1 million from $138.1 million in 2Q 2009. Group turnover at $1,097.9 million was 27% lower as compared with $1,497.6 million for the corresponding period in 2009.

Group operating profit at $202.3 million was 21% higher than the same quarter in the previous year. Group pre-tax profit increased 26% to $224.8 million from $178.9 million in 2Q 2009. These increases are mainly attributable to execution of projects ahead of schedule and the Group achieving better margins for rig building, offshore and conversion projects through higher productivity, according to a Sembcorp report.

For the half year, Group turnover at $2,457.3 million was 14% lower than the $2,861.1 million for the corresponding period in 2009. Group operating profit at $361.9 million was 20% higher as compared with $301.3 million in the previous year. At the pre-tax level, Group profit increased 24% to $409.7 million from $330.1 million in 1H 2009.
Net profit for 1H 2010 at $324.9 million was 26% higher as compared with $258.3 million recorded in 1H 2009.

Interim dividend
In view of the Group’s strong performance for 1H 2010, the Board of Directors is recommending a one-tier tax-exempt interim dividend of 5.00 cents per share.

The one-tier tax-exempt interim dividend will be paid to shareholders on 31st August 2010.

Outlook
The Group has a net order book of S$4.3 billion with completion and deliveries stretching till December 2012. This includes S$853 million in contract orders secured to-date since January 2010 comprising the construction of the Ekofisk North Sea accommodation topside for Norway’s ConocoPhillips Skandinavia AS, the P-62 pre-FPSO conversion for Petrobras Netherlands B.V. and the incremental order book derived from the sale of CJ-70 harsh-environment jack-up drilling rig to a subsidiary of Seadrill Limited.

The world economy continues to improve, albeit at an uneven pace across countries, with growth largely driven by Asia. While the recent oil spill and the subsequent US government moratorium have an immediate impact on deepwater drilling activities in the Gulf of Mexico, the mid to longer term consequence will be more safety regulations and survey compliances for the offshore oil and gas industry. Potentially, this may result in the upgrading of existing rigs to meet the more stringent requirements and new rig orders to replace the aging fleet for drilling in deep waters. The Group is well-placed to leverage on these opportunities with its proven track record and strong turnkey rig construction capabilities.

The fundamentals driving the offshore oil and gas sector remain intact with oil prices remaining above the US$70 bbl range. Despite the volatile global environment, we continue to receive enquiries but competition is very keen.

For Brazil, the Group has tendered bids for seven (7) units of drillships based on the exclusive Jurong LMG drillship design and two (2) units of semi-submersible rigs based on the Friede & Goldman Ex-D design.

The ship repair market continues to improve with the bigger docks well-booked due to strong support from the Group’s Alliance/FCC and regular customers as well as its niche market segment of LNG carriers.