29 Jul 2015

Sembcorp Marine Posts 1H 2015 Net Profit of $215 Million

Singapore, July 29, 2015: Sembcorp Marine achieved a net profit of $215 million for the six months ended 30 June 2015, a decline of 15% compared with 1H 2014 as industry conditions continued to be weak on low oil prices and the sharp fall in global oil & gas capex spend.

Group turnover for six months ended 30 June 2015 decreased 6% year-on-year to $2.51 billion, which compares with $2.68 billion for the corresponding period in 2014. The decline in revenue was due mainly to a fall in rig building and repair revenue booked, while offshore & conversion revenue was higher.

In 1H2015, Group EBITDA (earnings before interest, tax and depreciation) declined 3% year-on-year to $347 million, while operating profit fell 6% to $285 million, from $303 million in the previous corresponding period.

At the pre-tax level, Group profit of $271 million was 15% lower than the $318 million achieved in the previous year. Associate and joint venture income declined 91% year on year to $1.3 million.

Turnover for the Rig building sector declined 18% year on year from $1.67 billion to $1.38 billion in the six month period. The Group delivered the Helix semi-submersible Q5000, the Prosafe accommodation semi-submersible as well as one Hakuryu jack-up rig during the six months, with another 16 rigs in the work-in-progress stage.

Offshore and conversion revenue increased 27% from $657 million in 1H2014 to $833 million in 1H2015.

Ship repair revenue was 14% lower at $266 million in 1H 2015 compared with $308 million in the corresponding period in 2014 as average revenue per vessel remained low although the number of ships repaired increased.

2Q 2015 VERSUS 2Q 2014

On a quarterly basis, Group turnover for 2Q 2015 at $1.21 billion was 10% lower when compared with $1.34 billion for the same period in 2014.

Group gross profit of $199 million was 3% higher on year-on-year basis mainly due to higher offshore and conversion projects and repair segment earnings.

At the operating level, Group profit fell 5% year on year to $147 million on higher operating expenses of which fair value adjustments on financial instruments led to a loss of $16.9 million on mark-to-market adjustments on foreign currency forward contracts.

Group pre-tax profit was 17% lower at $136 million, on lower contribution from associates and joint ventures and higher finance costs. Group finance costs increased to $11.2 million from $3.6 million previously.

Net profit in 2Q 2015 declined 17% year-on-year to $109 million compared with $132 million in 2Q 2014.

Balance Sheet

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 a
s they fall due.

Trade and other receivables increased mainly due to billings to a customer in accordance with the contract terms for ongoing projects and the amount of $380 million was subsequently received on July 1, 2015. This will improve the Group’s net borrowing position.

Interim Dividend

The Board of Directors is recommending a one-tier tax-exempt interim dividend of 4.00 cents per share for 1H 2015 (1H2014: 5.00 cents). The one-tier tax-exempt interim dividend will be paid to shareholders on 28 August 2015. The interim dividend payout ratio of about 39% is in line with that of 1H 2014.

OUTLOOK

The persistently low oil prices have escalated the ongoing cuts in global exploration and production capital expenditure. Some customers are deferring or seeking to defer the delivery of their ordered rigs on a lack of charter contracts.

While the new order outlook for offshore exploration vessels remains bleak, particularly in the jack-up segment which is in an oversupply situation, the Group has benefitted from its strategy to diversify its product offering in addition to drilling solutions.

Brazil’s oil and gas industry remains fraught in uncertainty. We continue to engage with our customers to find the best way forward for our projects and to explore all options including slowing down construction.

The Group has a net order book of S$10.9 billion. This includes S$1.35 billion in contracts secured since January 2015, the largest of which is the engineering and construction contract for the DP3 new semi-submersible crane vessel for Heerema Offshore Services B.V.

While the Group faces many challenges ahead, we will continue to actively manage our balance sheet to maintain a healthy financial position.

On July 1, 2015, we reached a key milestone in our Transformation efforts as our various business units were integrated under ONE Brand focusing 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.

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

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

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