Results for First Quarter 2016
Key highlights:For the three months to March 31, 2016,
- Revenue totalled $918 million, compared with 1Q 2015 revenue of $1.3 billion.
- Gross profit totalled $81 million.
- Group EBITDA of $106 million.
- Net profit of $55 million.
- Annualised ROE at 8.7%.
- Group net order book stands at $9.7 billion as at 1Q 2016 with new contracts secured of $60 million.
Singapore, April 27, 2016: Sembcorp Marine posted group revenue of $918 million for the three months ended March 31, 2016 (1Q 2016) compared with $1.3 billion for 1Q 2015.
Turnover for Rigs & Floaters was $540 million for the 1Q 2016, a 43% decline from the $947 million booked in the previous corresponding period. The decline was largely due to lower revenue recognition for the rig building projects resulting from customer deferment requests and customer restructuring. Floaters revenue was higher. The Group delivered one accommodation semi-submersible vessel to Prosafe and one FPSO conversion to Modec during the three-month period.
Offshore Platforms revenue increased 10% year-on-year from $237 million in 1Q 2015 to $261 million in 1Q 2016.
Repairs & Upgrades revenue was mostly unchanged at $99 million in 1Q 2016 from $100 million previously, with 125 vessels repaired compared with 121 vessels in 1Q 2015.
With the sharp revenue decline in its largest segment of Rigs & Floaters, Group gross profit declined 52% year-on-year to $81 million. EBITDA was $106 million compared with $169 million achieved in 1Q 2015. The Group also recorded a gain of $9 million on deemed disposal of Gravifloat from the Group’s step-up acquisition from 12% to 56% in March 2016.
Group earnings were also depressed as customer requests for deferment resulted in lower margin recognition for rig building projects. However, this was partly offset by higher margin recognition from Floaters and Offshore Platform projects.
The short term borrowings as at 31 March 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 long term banking facilities to refinance the short term borrowings as they fall due.
The offshore oil and gas exploration industry is now into its second year of weak prices and capex cuts following the collapse of oil prices in mid 2014. Offshore rig charter contracts continue to be negotiated at lower levels and utilisation is on a downtrend for all segments.
The global oil and gas industry continues to be volatile and uncertain with the April OPEC and non-OPEC producers meeting in Doha failing to reach an agreement for a production freeze.
On 20 Apr 2016, shareholders of Sete Brazil agreed to a plan to file for judicial recovery. Meanwhile the political upheaval in Brazil continues with the drive to impeach its current President.
Sembcorp Marine believes this down-cycle is likely to be more protracted than previous cycles. Whilst maintaining its cautious outlook, the Group is prepared not just to overcome these challenges but to lay stronger foundations for the future when the market recovers. The Group will continue to actively manage its balance sheet. It remains optimistic of the longer term prospects of its business with facilities being built to cater to the Industry’s demand for the long term. 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:
Ms Lisa Lee
Head of Investor Relations
Tel No: (65) 6262 7107
Mr David Wong
Head of Corporate Communications
Tel No: (65) 6262 8036
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