9M 2015 Net Profit at $247 Million, 3Q Net Profit of $32 Million
Singapore, October 22, 2015: Sembcorp Marine posted a 17% year-on-year decline in group revenue from $4.4 billion to $3.6 billion for the nine months to September 2015 due to lower revenue recognition for rig building projects and ship repair.
For the nine months to September 2015, Gross Profit declined 19% year-on-year from $569 million to $459 million, while EBITDA was down 19% from $558 million to $454 million, mainly due to lower contributions from rig building projects and repair business. Contributions from offshore platform projects were higher.
The Group also recorded $23 million in losses from its share of results from associates and joint ventures for the nine month period (profit of $17 million previously). A further $17 million one-off, non-operating impairment related to available-for-sale financial assets was made in 3Q 2015, which also impacted the 9M 2015 period.
Group Net profit of $247 million for the nine months ended September 2015 was 36% lower than the $386 million earned in the previous corresponding period. The lower net profit was due to lower contributions from rig building projects, associate losses and impairment. However, contributions from the offshore platform projects were higher. Excluding the non-operating impairment, 9M 2015 net profit would have been $264 million.
Turnover for Rigs & Floaters was $2.5 billion for the nine months to September 2015, a 21% decline from the $3.1 billion booked in the previous corresponding period. The Group delivered three rigs in the nine months, compared with six rigs in the previous corresponding period.
Offshore Platforms revenue decreased 4% year on year from $755 million to $722 million. Despite an increase in the number of ships repaired, Repairs & Upgrades revenue declined 15% year on year from $465 million to $397 million due to lower average revenue per vessel.
3Q 2015 VERSUS 3Q 2014
On a quarterly basis, Group turnover for 3Q 2015 was $1.1 billion, 34% lower compared with $1.7 billion previously mainly due to the reduction of rig deliveries in the quarter as well as lower ship repair revenue. Contributions from Offshore Platforms were higher.
Some of the Group’s jack-up rig customers have requested for delivery deferment of their rigs which has resulted in the suspension of revenue recognition for several rig building contracts. Customer’s restructuring has also contributed to the lower revenue recognition.
Group Gross Profit decreased 56% year-on-year to $91 million mainly due to lower contributions from rig building projects and repair. Customer deferment requests have resulted in lower margin recognition for rig building projects. However, contribution from offshore platforms projects was higher.
Group Pre-tax Profit came to $23 million, impacted by $24 million in losses from its share of results from associates and joint ventures and higher finance expenses as well as $17 million in impairment on available-for-sale financial assets.
The 3Q 2015 Net Profit of $32 million compares with $132 million net profit in 3Q 2014, largely due to lower contributions from rig building, losses from associates, higher interest expense and non-operating items (mainly impairment charge).
Interest-bearing borrowings increased mainly due to borrowings for working capital and capital expenditure. The Group has secured adequate committed long-term banking facilities to refinance the short-term borrowings as they fall due. Cash and cash equivalent decreased mainly due to capital expenditures, dividends paid and working capital changes for ongoing projects.
Low oil prices and the oversupply situation in the global offshore exploration segment continues to weigh on offshore rig utilisation and charter rates, leading to the lack of new charter contracts and the cancellation of existing charters.
As stated in our 1H 2015 outlook, some of our customers are deferring or are seeking to defer the delivery of their ordered rigs. These deferrals have now resulted in a delay in earnings recognition from these projects. Brazil’s oil and gas industry continues to remain fraught in uncertainty.
The group faces many challenges ahead and we will continue to actively manage our balance sheet to maintain a healthy financial position.
Despite the depressed market, the group has secured $2.9 billion in new contracts year-to-date for the offshore production market segments bringing our net total order book to $11.6 billion.
On July 1, 2015, we reached a key milestone in our Transformation efforts as our various business units were integrated under one brand focussing on four key capabilities, namely, Rigs & Floaters; Repairs & Upgrades; Offshore Platforms; and Specialised Shipbuilding. As an integrated Sembcorp Marine, we will optimise our capabilities and capacities, as well as increase our efficiency and productivity to better serve our partners and customers.
While the immediate operating environment in the offshore rig building industry remains very challenging, Sembcorp Marine remains focussed on the timely and effective execution of its current order book and efficient working capital management. We are confident of the long term fundamentals of the offshore and marine industry and believe our investments in new capabilities and facilities will help ensure sustainable returns for the Group, both in Singapore and at our overseas yards.
For more information, please contact:
Ms Lisa Lee
Head of Investor Relations
Tel No: (65) 6262 7107
Mr David Wong
Head of Corporate Communications
Tel No: (65) 6262 8036
For the complete PDF version of this release, please click here.
For the Financial Statement, please click here.
For more details please refer to our website: www.sembmarine.com