Sembcorp profits up 63% on more rig building projects

Yet Group's 2009 4Q turnover slid by 17% due to timing of revenue recognition.

Sembcorp Marine delivered record performance in 2009 amid challenging operating environment that prevailed during the year.

Group attributable profit after tax increased by 63% to $700.1 million, the highest ever achieved.

Group turnover rose by 13% or $660.8 million to $5,724.7 million with the rig building sector registering an increase of 28% due to progressive recognition of rig building projects.

Group operating profit at $862.4 million was 72% higher than the corresponding period in 2008.

At pre-tax profit level, Group earnings increased 67% to $907.6 million from $545.0 million in 2008, attributable mainly to higher operating margins from rig building projects.

4Q 2009 vs 4Q 2008

On a quarterly basis, Group attributable profit after tax for 4Q 2009 at $297.2 million was the highest quarter ever recorded. This was 328% higher as compared with
$69.4 million recorded in 4Q 2008. Group turnover at $1,343.2 million for 4Q 2009 was 17% lower as compared with $1,617.5 million for the corresponding period in 2008.

Turnover was higher in 4Q 2008 due to the variation order settlement for a turnkey conversion project. Group operating profit at $387.0 million was 129% higher than 4Q 2008’s $168.8 million.

At pre-tax profit level, Group earnings increased 348% to $394.8 million in 4Q 2009 as compared with $88.2 million in 4Q 2008. The record 4Q 2009 profit was attributable to combination of operational efficiency, execution of projects ahead of schedule, resulting in better margins and resumption of margin recognition for some of the projects.

Dividend

The Directors have recommended a total final cash one-tier tax-exempt dividend of 10.00 cents per share comprising a final ordinary dividend of 6.00 cents plus a special dividend of 4.00 cents per share in view of the exceptional results in respect of the financial year ended 31 December 2009.

Including the interim one-tier tax-exempt cash dividend of 5.00 cents per share paid on 1st September 2009, the total dividend for FY 2009 will be 15.00 cents per share, an increase of 36% over the 11.00 cents per share in FY 2008.

The proposed final dividend, if approved at the Annual General Meeting to be held on 20 April 2010, will be paid on 10 May 2010.

Outlook

The Group has a net order book of $5.5 billion with completion and deliveries stretching till early 2012. This includes the $1.25 billion in new orders secured in FY 2009.

The year ahead sees increasing confidence with the global economy showing signs of recovery albeit at different speeds in the various regions, driven largely by Asia.

Demand for energy is also expected to grow. Fundamentals for the offshore oil and gas sector remain intact with prices of oil stabilising within the range of US$70 to US$80 a barrel. Long-term fundamentals driving deepwater exploration and production activities are expected to continue in order to replenish declining oil and gas reserves and to increase production to meet growing energy demand.

Although the Group’s order book may benefit from this growth, they will face severe competition from other shipyards.

For ship repair, the bigger docks are well-booked due to the strong support from the Group’s Alliance/FCC and regular customers and its niche market segment of LNG carriers’ refurbishment. Demand for bigger docks remains strong.

FY 2009 was an exceptional year in terms of profit. With the existing orders, the
Group expects to achieve satisfactory results for FY 2010.

"FY 2009 was a solid year with strong operational growth for the Sembcorp Marine Group. Despite the challenging operating environment which also affected our customers in 2009, we remained focused in executing and delivering our projects on time or ahead of schedule. This strategy paid off with operating margin increasing from 9.9% in 2008 to 15.1% in 2009. We will continue to build on our order book and further enhance our operational efficiencies and leading edge as a globally competitive Group for sustainable growth," Mr Wong Weng Sun President and CEO said.