Sembcorp Marine recovers from loss with $2.70m profit

The industry is showing initial signs of recovery.

Sembcorp Marine is back in the black after it recovered from loss of $21.80m to a net profit of $2.70m in Q3.

According to OCBC Investment Research, revenue fell 64.3% YoY to $316.9m. Meanwhile, profits for the nine months of the year hit $47.9m.

Previously recognised revenue for the two Perisai rigs were reversed in Q3, whilst revenue reversal for the three Oro Negro rigs will take place in Q4.

"Oil prices have firmed slightly along its one-year price range of between US$46 to US$60/bbl, and with this encouraging trend, upstream oil and gas investment activities have started to show signs of improvement," OCBC analyst Low Pei Han said.

Day rates and utilisation levels for offshore drilling rigs have also improved, whilst recent mergers and acquisitions (M&A) activities and increasing secondary rig sales are signs of initial recovery in the business.

"Despite this, we still expect new orders to come mainly from the non-drilling segment as recovery in the drilling market will still take time," Low said.

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The group continues to receive active enquiries for projects relating to floaters, production platforms, gas solutions and specialized shipbuilding.

Sembcorp Marine is also in advanced discussions with several prospective customers relating to its Gravifloat technology and are hopeful that initial orders will materialise in the foreseeable year.

Meanwhile, net gearing remained at 1.3x in Q3. The group has also received the US$500m payment from Borr Drilling; with this, net gearing will fall to 1.0x.