Sembcorp Marine's net profit sinks 27.9% to $39.5m in Q1

Lower turnover for rigs and floaters badgered its earnings.

Sembcorp Marine started the year stuck in the doldrums as it reported a 27.9% slump in net profit to $39.5m due to lower sales.

This came as revenue fell 17.2% to $760.1m. Turnover for rigs and floaters was $347m, down 36% from $540m booked in the previous year.

According to OCBC Investment Research, Sembcorp Marine (SMM) would have reported a net loss of about $10m if without the $46.8m gains from the divestment of its 30% interest in COSCO Shipyard Group, which was completed in January 2017.

Meanwhile, the group continues to right-size its operations by returning yards to the government. The Tanjong Kling yard will also be returned ahead of its lease expiry date. There was a reduction of about 500 in its workforce in 1Q17, including employees and subcontractors. Since 2015, the reduction in total workforce has been about 9,000.

Here's more from the brokerage firm:

In 1Q17, SMM had new orders of S$75m (all variation orders). New order enquiries relating to non-drilling solutions have increased over the past two months, and there have been “active engagements with potential customers in recent months for potential projects”.

SMM has also made further progress in the development of its near-shore gas infrastructure solutions using its Gravifloat technologies; the group is in “active discussions with several potential customers” and remains hopeful of new orders in 2017 for this new business segment. Meanwhile, SMM’s net order book stands at S$7.14b; excluding the Sete Brasil drillships, it is about S$4.02b.