SembMarine swings to net loss in second quarter amid loss on West Rigel sale

Singapore five-dollar note Photo by Leslie Shaffer

Sembcorp Marine said on Friday that it swung to a net loss of S$55.6 million, worse than some analysts had expected, due to a S$27 million loss on the sale of the West Rigel rig and lower activity volume.

In the year-earlier quarter, SembMarine had posted a net profit of S$5.1 million, which was restated due to accounting rule changes.

CIMB had forecast earlier this month that SembMarine would post a net loss of around S$20 million for the second quarter, based on a negative 1 percent EBIT margin; EBIT stands for earnings before interest and taxes.

Turnover for the quarter rose 151 percent  on-year to S$1.627 billion, it said, saying the rise was due to a higher percentage of revenue recognition from the Transocean drillships, the Johan Castberg and Shell Vito projects, as well as recognition of two additional jack-up rigs delivered to Borr Drilling and the sale of West Rigel during the quarter. That was offset by lower revenue from Offshore Platforms after completing the Culzean Project, it said in a filing to SGX after the market close on Friday.

For the first half, SembMarine reported a net loss of S$50 million, including the loss from the West Rigel rig, swinging from a year-earlier net profit of S$42.2 million. Turnover for the first half was S$2.81 billion, up 101 percent on-year.

SembMarine said it didn’t declare an interim dividend to conserve cash amid a challenging business environment, compared with a year-earlier dividend of 1.0 Singapore cent.

SembMarine was cautious in its outlook statement.

“The overall industry outlook remains challenging. While improvement in exploration & production capex spending is projected to continue, it will take some time before we see a sustained recovery in new orders,” it said. “Overall business volume and activity for the group is expected to remain low for the immediate quarters. The trend of negative operating profit will continue in the near term.”

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