Sembcorp Marine's Q4 profits sink 94.9% to $5.93m

It blamed losses from the $34m sale of a semi-submersible and continued low business volume.

Sembcorp Marine’s (SembMarine) Q4 profits plunged 94.9% YoY to $5.93m from $117.31m, an announcement revealed. Its revenue inched up 0.2% YoY from $911.57m to $913.17m.

In FY18, the firm’s total profits sunk into the red after recording a loss of $74.13m from $260.18m in 2017. However, revenue climbed 61.1% YoY from $3.03b in 2017 to $4.89b.

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According to its financial statement, the $34m sale of the west Rigel semi-submersible and continued low overall business volume dragged on its earnings for Q4 and FY18. Turnover for Q4 and FY18 increased due to higher revenue recognition for rigs & floaters on the back of the delivery of seven jack-up rigs to Borr Drilling, as well as revenue recognition for newly secured projects.

Q4 turnover for rigs and floaters inched up 16.7% YoY to $745.7m from $639.2m in the previous year, due to revenue recognition for ongoing production and drillship projects and the Borr Drilling and BOTL jack-up deliveries.

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Revenue from the offshore platforms segment declined 74.8% YoY from $732.1m to $184.2m, due to fewer contracts on hand and the completion of existing projects, such as three topside modules for the Culzean platform projects that were completed and delivered in June 2018.

Meanwhile, turnover from SembMarine’s repairs & upgrades segment totalled $140m in Q4 compared with $144m in 2017 on fewer ships repaired. Across FY18, a total of 296 ships and other vessels were repaired or upgraded in the 12 months compared with the 390 units in FY17. Average revenue per vessel was higher at $1.61m compared with $1.28m on the back of improved vessel mix of higher-value works.

The Group secured $1.18b in new orders in FY18, bringing its net order book to $6.21b. Excluding the Sete Brasil drillships, SembMarine’s net order book stood at $3.09b.

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According to the firm, offshore rig orders are expected to take some time to recover as the market remains over-supplied amidst an increase in offshore drilling activities.

“The ship repairs and upgrades segment remains intensely competitive although the market is expected to improve with higher work volume from the new IMO regulations requiring the installation of ballast water treatment systems and gas scrubbers,” SembMarine said in a statement. “Overall business volume and activity for the Group, whilst stabilising, is expected to remain relatively low.”

As part of the Group’s transformation and yard consolidation strategy, the Group will move all operations from its Tanjong Kling Yard (TKY) by end-2019, four years ahead of schedule, SembMarine noted. The move will reportedly realise cost savings estimated at $48m per annum from FY 2020.