This article was originally published on Friday, 3 May 2019 at 7:48 A.M. SGT; it has since been updated.
Sembcorp Marine reported Friday its first quarter net profit dropped 68 percent on-year to S$2 million amid higher year-ago rig deliveries and a lack of large-scale offshore platform contracts recognized in the period.
Lower overall business volume continued, impacting the absorption of overhead costs, the company said in a filing to SGX before the market open.
“Overall, competition remains intense, and production activity for the group is expected to remain low,” SembMarine said in the filing.
Revenue for the quarter ended 31 March came in at S$811 million, down 31 percent on-year, as higher revenue from repairs and upgrades was offset by lower revenue from rigs and floaters and offshore platform projects, SembMarine said.
In the rigs and floaters segment, revenue was S$680 million, dropping from S$1.02 billion in the year-ago quarter when revenue was recognized for delivering two jack-up rigs to Borr Drilling and one jack-up rig to BOTL, the filing said.
In 2019’s first quarter, the rigs segment’s revenue was mainly from higher percentage recognition of drillship and floater projects, and the delivery of one jack-up rig to Borr Drilling, SembMarine said.
For offshore platforms, revenue tumbled to S$15 million for the quarter from S$62 million in the year-ago perion on the lack of large-scale contracts recognized and low initial recognition of the Hornsea II project, SembMarine said.
In the repairs and upgrades segment, revenue jumped to S$103 million from S$79 million in the year-ago quarter on higher value per vessel, even as only 75 vessels were repaired or upgraded in 2019’s first quarter, compared with 80 in the year-earlier period, SembMarine said. The average revenue per vessel was S$1.37 million, compared with S$990,000 in the year-ago quarter, it said.
New contracts in the quarter were S$175 million for projects including building an LNG bunker vessel and repair and modernization works on 13 cruise ships, the company said. The net order book was at S$5.77 billion, it added.
In its outlook, SembMarine said it was seeing increasing enquiries and tenders for offshore production units, engineering services and gas-value-chain related projects.
Wong Weng Sun, president and CEO of SembMarine, noted in prepared remarks that global capital expenditure for offshore exploration and production continued to improve.
But he added, “Despite the improving industry fundamentals, time and effort are required for co-development with prospective customers prior to securing new orders. Competition remains intense.”