Sembcorp Marine reports higher turnover, lower profit

FEBRUARY 21, 2013 — Singapore’s Sembcorp Marine recorded a full year net profit of Singapore $538 million in 2012. Earnings per share for the Group were 25.8 cents, while return on equity was 22.2 percent.

Group net profit 28 percent lower as compared with S$ S$752 million a year ago. On a quarterly basis, 4Q 2012 2 net profit at S$167 million was 27 percent lower as compared with S$229 million in 2011. Excluding non-operating items, net profit at S$500 million was 29 percent lower as compared with S$S$700 million in 2011 while net profit in 4Q 2012 at S$126 million was 29 percent lower than the S$177 million recorded for the corresponding prior year period last.

Group operating profit in 2012 was S$554 million as compared with S$737 million in 2011. On a quarter to quarter basis, operating profit in 4Q 2012 was S$148 million aas compared with S$201 million in 2011.

Group turnover for FY2012, at S$4,430 million, was 12 percent than in 2011. Overall, the higher turnover was attributable mainly to higher revenue recognition from offshore platform projects and more rig building projects achieving initial progressive recognition in 4Q 2012 with turnover increasing by 38 percent from S$998 million n in 4Q 2011 to S$1,378 million in 4Q 2012.

For the rig building sector, 4Q 2012 turnover at S$870 million was 44 percent higher as compared with S$602 million for the same period in 2011 with the initial recognition of the Group’s first drillship. This together with three  jack-up rigs contributed to the higher turnover in 4Q 2012. On a full year basis, turnover in 2012 at S$2,356 million was 7 percent higher as compared with S$2,205 million in 2011.

The ship conversion and offshore sector also registered a 46 percent increase in turnover from S$226 million in 4Q 2011 to S$330 million in 4Q 2012 attributable to seven projects achieving progressive revenue recognition and the delivery of a FPSO unit during the period. For full year 2012, it was S$1,395 million, up 30 percent from S$1,073 million in 2011.

Turnover from the ship repair sector in 4Q 2012 was S$167 million, an increase of 5 percent as compared with S$159 million for the same period in 2011. For FY 2012, it was S$642 million, comparable to S$644 million in 2011.

OUTLOOK
The Group has a net order book of S$13.6 billion with completion and deliveries stretching into 2019. This includes S$11 billion in contract orders secured in 2012 and a S$900 million contract secured since the start of 2013, excluding ship repair contracts.

Moving ahead, says Sembcorp Marine, the Group remains focused on operational efficiency, productivity improvements, safety management and timely deliveries.

Sembcorp Marine says the long-term industry fundamentals for the Offshore Oil and Gas sector remain sound underpinned by high oil prices and projected increases in offshore exploration and production (E&P) spending. Demand for rigs is expected to remain strong given the aging rig fleet and the increasing focus by oil companies for new, safer and efficient rigs and rigs capable of operating in harsh environment.

There is continued demand for repair, upgrading and life extension work, in particular in the niche segments of LNG carriers, passenger/cruise vessels and offshore vessels.

Demand for the Group’s big docks remains strong as the alliance and long-term customers continue to provide a stable and steady base-load. Sembcorp Marine says the Group continues to receive healthy enquiries for the various segments, although competition remains keen with effects on margin.

PROGRESS OF NEW SHIPYARDS

Integrated Tuas New Yard, Singapore
 
Sembcorp Marine’s Phase I of the Integrated New Yard Facility, which spans 73.3 hectares, is on track to be commercially operational in the second half of 2013. Equipped with leading-edge technology, the new yard will be capable of servicing a wide range of vessels, including VLCCs, new generations of mega containerships, LNG carriers and passenger ships. It will also be geared to meet the stringent safety and quality requirements of vessels and to comply with new regulatory and environmental standards.

Estaleiro Jurong Aracruz, Brazil
 
Construction work on Estaleiro Jurong Aracruz, Sembcorp Marine’s first overseas Integrated New Yard Facility in Brazil, has commenced. The 82.5-hectare wholly-owned locally incorporated shipyard, which broke ground in December 2011, is scheduled for completion by end 2014.