Sembcorp Marine profits inch up

Pacific 400 Class jack-ups

FEBRUARY 24, 2014 — Singapore’s Sembcorp Marine recorded a full year net profit of Singapore $556 million in 2013, 3% higher than the previous year’s S$538 million. On a quarterly basis, 4Q 2013 net profit at S$182 million was 9% higher as compared with S$167 million in 2012.   Excluding the non-operating items, the Group’s net profit at S$553 million in 2013 was 11% higher as compared with S$500 million in 2012 while net profit in 4Q 2013 at S$182 million was 45% higher than the S$126 million recorded for the corresponding quarter last year.

Group operating profit in 2013 increased 16% to S$644 million from S$554 million in 2012.  On a quarter to quarter basis, operating profit in 4Q 2013 at S$188 million was 27% higher as compared with S$148 million in 4Q 2012.

Group turnover for 2013 was S$5,526 million, a 25% increase compared to S$4,430 million in 2012.  Overall, the higher turnover was attributable mainly to higher revenue recognition with more rig building projects achieving initial progressive recognition in 4Q 2013 resulting in  a  23% increase in turnover from S$1,378 million in 4Q 2012 to S$1,693 million in 4Q 2013.

For the rig building sector, 4Q 2013 turnover at S$1,197 million was 38% higher as compared with S$870 million for the same period in 2012.  The increase was attributable to the initial recognition of the second unit of the Group’s repeat drillship design, one accommodation semisubmersible rig and two jack-up rigs.  On a FY 2013 basis, turnover increased 51% to S$3,564 million as compared with S$2,356 million in 2012.   A total of eight jack-up rigs comprising of diverse designs were delivered during the year.  These deliveries include four jack-ups from the Group’s proprietary Pacific Class 400 design series, two Friede & Goldman JU3000N design rigs and two remaining units based on the Friede & Goldman JU2000E design.

The ship conversion and offshore sector registered a 5% decline in turnover from S$330 million in 4Q 2012 to S$314 million in 4Q 2013 attributable to the timing of projects that achieved progressive revenue recognition during the period.  For FY 2013, it was 14% lower from S$1,395 million in 2012 to S$1,204 million.  The decline was due to the timing of projects coupled with lesser number of projects that achieved progressive revenue recognition during the year.

Turnover from the ship repair sector in 4Q 2013 was S$163 million as compared with S$167 million for the same period in 2012 due mainly to the timing in recognition of the repair and upgrade projects.  For FY 2013, it was S$681 million, a 6% increase as compared with S$642 million in 2012.

OUTLOOK

The Group reports a net order book of S$12.3 billion with completion and deliveries stretching into 2019.  This includes S$4.2 billion in contract orders secured in 2013, excluding repair and upgrade contracts.   

It says that “the global economy remains fragile and uncertain” and that “amid the volatile economic conditions and a competitive landscape,” it remains focused on its core business.  Moving ahead and in anticipation of a tight labou supply situation, the Group will further improve operational efficiency, productivity and safety management as well as ensure timely delivery of projects to its customers, although margin remains challenging.

Demand remains strong for Sembcorp Marine’s big docks, including the four VLCC dry docks that commenced operations at the Group’s new 73.3-hectare Sembmarine Integrated Yard at its Tuas Phase I facility in August 2013.  The new shipyard will position Sembcorp Marine for long-term sustainable growth with its innovative design, advanced automation and optimized facilities.

PROGRESS OF BRAZILIAN YARD CONSTRUCTION

Construction on Estaleiro Jurong Aracruz, Sembcorp Marine’s wholly-owned shipyard in Brazil, continues to progress well and the yard remains on track to commence initial operations in second half 2014.