28 Jul 2016

Results for 1H 2016: First Half 2016 Net Profit of $66 Million

Key highlights: For the six months to June 30, 2016:

  • Revenue totalled $1.8 billion
  • Group EBITDA of $196 million
  • Gross profit totalled $187 million
  • Net profit of $66 million
  • Group net order book stands at $9.2 billion as at 1H 2016
  • Interim dividend of 1.5 declared

Singapore, July 28, 2016: Sembcorp Marine posted group revenue of $1.8 billion for the six months ended June 30, 2016 (1H 2016). This compares with $2.5 billion in group revenue achieved in 1H 2015.

Turnover for Rigs & Floaters was $956 million for 1H 2016, a 45% year-on-year decline from the $1.7 billion booked in the previous corresponding period. The decline was led by lower revenue recognition for rig building projects resulting from customers’ delivery deferment requests. Floaters revenue was higher on good progress from FPSO and FSO projects.

Offshore Platforms revenue increased 21% year-on-year from $488 million in 1H 2015 to $589 million in 1H 2016 on sales recognition from its growing order book base.

Key deliveries for Rigs & Floaters and Offshore Platforms segments in 1H 2016 include an accommodation semi-submersible vessel to Prosafe, the Ivar Aasen process, drilling and quarters topsides to Det noske olijeselskap ASA and the Maersk Highlander F&G JU2000E jack-up rig to Maersk.

In July 2016, Sembcorp Marine also delivered the Noble Lloyd Noble jack-up rig to Noble Corporation. Receipts from this delivery and other major projects totalled more than $900 million. This should further reduce our net gearing from 1.07 times as at 1Q 2016 to below 1.0 times in July 2016.

Repairs & Upgrades revenue declined 8% to $245 million in 1H 2016 from $266 million previously, despite an increase in the number of ships repaired to 258 vessels compared with 235 vessels in 1H 2015.

With the sharp revenue decline in its largest segment of Rigs & Floaters, 1H 2016 Group gross profit declined 49% year-on-year to $187 million. EBITDA was $196 million compared with $347 million achieved previously. 1H 2016 Group net profit declined 69% year-on-year to $66 million from $215 million in 1H 2015.

A gain of $9.3 million from Gravifloat investment was offset by an impairment loss of $8.4 million on the Group’s holdings in available for sale financial assets.

 

FINANCIAL HIGHLIGHTS

FinancialHighlights2Q2016

 

2Q 2016 VERSUS 2Q 2015

On a quarterly basis, Group turnover for 2Q 2016 at $908 million was 25% lower when compared with $1.2 billion for the same period in 2015.

Group gross profit of $106 million was 47% lower on year-on-year basis mainly due to lower rig building projects. Group operating profit fell 64% year on year to $54 million.

Operating profit before the effects of foreign exchange was $86 million, which was higher than the $65 million for 1Q 2016. Foreign exchange losses in 2Q 2016 mainly arose from revaluation of assets and liabilities denominated in Sterling pounds and US$ to Singapore dollar.

Group pre-tax profit was 86% lower at $19 million, on higher finance costs, losses from associates and $8 million impairment. 2Q 2016 net profit was $11 million compared with $109 million in 2Q 2015. Excluding non-operating items of $8m, 2Q 2016 net profit would have been $20 million.

 

BALANCE SHEET

Short term borrowings as at June 30, 2016 decreased as compared with the preceding year-end mainly due to refinancing of short term borrowings to long term borrowings. The Group has secured adequate committed banking facilities to support its operations.

With the successful delivery of a jack-up rig in July 2016, the work-in-progress will be reduced. Receipts from this delivery and other major projects totalled more than $900 million, bringing our net gearing down from 1.07 times as at 1Q 2016 to below 1.0 times in July 2016.

 

INTERIM DIVIDEND

The Board of Directors is recommending a one-tier tax exempt interim dividend of 1.5 cents per share for 1H 2016 (1H 2015: 4.00 cents). This represents a dividend payout ratio of 47% compared to the 39% for 1H 2015. Book closure is August 18, 2016 and the one-tier tax exempt interim dividend will be paid to shareholders on August 29, 2016.

 

OUTLOOK

Global economic growth remains subdued and uncertain. More offshore exploration and production projects have been curtailed. Capital investments in oil & gas are significantly down and this will continue to have a negative impact on the recovery process.

There has been no significant development since Sete Brasil’s filing for judicial restructuring on April 29, 2016. We will continue to engage Sete Brasil.

The Group remains focussed on delivering from its order backlog with net orders totalling $9.2 billion as at end June 2016. The Group’s recent significant and successful project deliveries have improved cash flow.

During these challenging times, the Group will continue to focus on costs, liquidity and balance sheet management. The Group continues to rigorously optimise its manpower requirements. We will remain prudent and will actively manage our balance sheet to maintain a healthy financial position.

Sembcorp Marine’s strategic investments in infrastructure and technology over the years have enhanced our resilience to navigate through these tough times. We have gone through several down-cycles in the past and have built up a strong core that will enable us to weather the elements during this difficult period.

 

 

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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