25 Oct 2016

Results for 3Q and 9M 2016: Nine months 2016 net profit of $44.5 million

Key highlights:

For the nine months to September 30, 2016:          

  • Gross profit totalled $258 million.
  • Group EBITDA of $264 million.
  • Group net order book stands at $8.37 billion.
  • Strategic acquisition of LMG Marin AS.

 

Singapore, October 25, 2016: Sembcorp Marine recorded total group revenue of $2.71 billion for the nine months ended Sep 30, 2016 (9M 2016). This compares with $3.64 billion in group revenue posted in 9M 2015.  

The Rigs & Floaters segment posted revenue of $1.39 billion for the 9M 2016, a 44% year-on-year decline from the $2.46 billion booked in the previous corresponding period. The decline was led by lower revenue recognition for the rig building projects resulting from customer deferment requests and customer restructuring. Floaters revenue was higher.

Offshore Platforms revenue increased 27% year-on-year from $722.4 million in 9M 2015 to $915.7 million in 9M 2016 on sales recognition of its robust order book base from Offshore Platforms contracts.

For the 9M 2016 period, key deliveries for Rigs & Floaters and Offshore Platforms segments include an accommodation semi-submersible vessel to Prosafe, the Ivar Aasen process platform, drilling and living quarters topsides to Det Noske Oljeselskap ASA, the Maersk Highlander F&G JU2000E jack-up rig to Maersk Oil and the Noble Lloyd Noble jack-up rig to Noble Corp.

Repairs & Upgrades revenue declined 12% year-on-year to $349.9 million for 9M 2016 from $397.2 million previously, despite an increase in the number of ships repaired to 379 vessels for 9M 2016 compared with 358 vessels in 9M 2015.

Group gross profit for 9M 2016 declined 44% year-on-year to $258 million from $459 million. EBITDA was $264 million compared with $454.1 million achieved previously.

The Group’s share of losses of associates and joint ventures for 9M 2016 increased by 29% year-on-year to $29.8 million. For the 9M 2016, Group net profit declined 82% year-on-year to $44.5 million from $247.2 million in 9M 2015.

A gain of $9.3 million from Gravifloat investment was offset by an impairment loss of $12.3 million on the Group’s holdings in Cosco Corp. Foreign exchange losses in 9M 2016 of $71.1 million mainly arose from revaluation of assets and liabilities denominated in Sterling pounds and US$ to Singapore dollars.

 

FINANCIAL HIGHLIGHTS

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3Q 2016 VERSUS 3Q 2015

On a quarterly basis, Group turnover for 3Q 2016 at $888 million was 21% lower when compared with $1.13 billion for the same period in 2015.

Group gross profit of $71 million was 22% lower on year-on-year basis mainly due to lower earnings from rig building projects. At the operating level, Group profit totalled $32.9 million, which represents a 56% year-on-year decline on higher operating expenses of which foreign exchange losses of $18.9 million mainly were reported on revaluation of assets in Sterling pounds.

The Group recorded a net loss of $21.8 million for 3Q 2016 compared with a net profit of $32.1 million in 3Q 2015 due mainly to higher finance costs of $22.5 million and share of losses of associates and joint ventures of $27.7 million for the quarter.

Excluding the effects of foreign exchange, operating profit for 3Q 2016 was $51.8 million, which was higher than the $39.6 million in operating profit (before effects of foreign exchange) for 3Q 2015.

During the quarter, the Group acquired a 100% stake in LMG Marin AS, a Norway-based company with expertise in naval architectural design, engineering and technology development. LMG owns a series of design patents and has experience in the design of drillships, offshore production & storage floaters, OSVs, LNG carriers, LNG-powered ships, car ferries and cruise ships.

 

BALANCE SHEET

Group net borrowings as at 30 September 2016 of $2.62 billion was lower than the $2.75 billion as at end FY2015 due to the cash inflow from project deliveries and milestone receipts from on-going projects.

 

OUTLOOK

The macro environment remains challenging, with global economic growth uneven and muted.  The outlook of the Oil & Gas Sector is uncertain and recovery is expected to be long drawn.  Offshore exploration and production projects continue to be curtailed.  There are however some prospects in the LNG value chain.

Sete Brasil filed for judicial restructuring on 29 April 2016.  We continue to monitor the developments.

Receipts from project deliveries and achievements of progress milestones have improved the Group’s cash flow and balance sheet during the quarter. The Group will continue to focus on liquidity, costs and balance sheet management. This includes active management of our manpower requirements in line with changing needs.

Sembcorp Marine expects to navigate these tough times, having gone through several down-cycles in the past.  With a strong core team and strategic investments in infrastructure and technology built over the years, the Group is more resilient and better positioned to capture new opportunities.

 

For more information, please contact:

Analysts’ queries:  

Ms Lisa Lee
Head of Investor Relations
Tel No: (65) 6262 7107
Email: lisa.lee@sembmarine.com


Media queries:

Mr David Wong
Head of Corporate Communications
Tel No: (65) 6262 8036
Email: david.wong@sembmarine.com

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