Seatrium marks turnaround with H1 net profit of S$36 million

OFFSHORE and marine specialist Seatrium on Friday (Aug 2) marked its turnaround with a net profit of S$36 million for the first half ended Jun 30, reversing from a net loss of S$264.4 million in the corresponding year-ago period.

Revenue for the half year rose 39.1 per cent to S$4 billion, from S$2.9 billion the year before. The group attributed the increase to recognition from new-build projects, and increased repairs and upgrades activities. 

Seatrium said its return to profitability reflected its strong focus on executing projects and improving margins. This is the first time the company has reported profits for the half-year period since its formation in 2023.

Earnings per share climbed to S$0.0105 in H1 FY2024, compared to a loss per share of S$0.094 previously.

Seatrium has a growing order book, having secured order wins of S$13.4 billion in the first half year. As at Jun 30, its net order book was at S$26.1 billion – the highest in a decade – representing a 61 per cent increase from end-2023.

Targets

Renewables and green solutions made up about S$9.3 billion, or 35 per cent, of the company’s net order book for the half year, an increase from S$6.3 billion from end-2023. The company has committed to an order book mix of 40 per cent renewables and green solutions as part of its sustainability target.

While Seatrium cannot control the final investment decisions on its projects, the target is a guide for focusing the company’s capability and capacity, said chief executive Chris Ong. From working with customers to training its staff, the company aims to continue building its order book mix to match the target.

“Being at the forefront in the race, the customer will see the value come to us – that is how we front the market and build up the different franchises in each of the areas,” he said.

The group’s order backlog, comprising 32 projects with deliveries until 2031, will underpin its revenue visibility for the next few years, Ong noted. Seatrium aims to complete the legacy projects that continue to impact overall margins by the end of this year.

Adrian Teng, the company’s chief financial officer, said: “The focus is to complete these legacy projects in 2024, so that we can move on from the past and focus on new orders that have been secured since the combination last year.”

The One Seatrium global delivery model will enable the company to take on projects in the most efficient, profitable way across its facilities. This includes subcontracting out parts of a project that would have better value from Seatrium’s partners.

Ong said: “This will enable us to effectively scale, taking on new projects at any point in time, while harnessing the competitive advantage of the locations we operate in.”

Seatrium currently targets mid-teens gross margins for new projects, and leverages its series-building strategy for operational efficiencies. Building out projects in series yields lessons, which are then applied to subsequent projects and supply-chain synergies for economies of scale.

Excluding the one-off provision of S$79 million for the full and final settlement to MH Wirth, Seatrium’s underlying net profit for H1 grew to S$115 million, reversing from a net loss of S$264 million for H1 FY2023.

Underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) came to S$390 million for H1, improving from S$36 million the year before. This was backed by better margins and lower overheads. 

Seatrium is on track to realise annual recurring savings of S$300 million by FY2025, and this is expected to impact gross margins. The focus on these cost-saving initiatives include standardising pricing terms with customers, reducing overheads, volume pooling during procurement, more efficient processing and asset rationalisation.

Additionally, its net leverage ratio for the half-year period was 2.9 times, falling from 3.2 times as at Dec 31.

This is from the group’s successful divestment of the Batangas Shipyard in the Philippines; the group has entered into an option to sell Crescent Yard in Singapore in the first half of the year.

No dividend was recommended for the period ended Jun 30.

There are no updates to the joint investigation by the Monetary Authority of Singapore and the Commercial Affairs Department pertaining to Operation Carwash.

The outlook for the offshore and marine industry remains positive, supported by broad-based demand across both the oil and gas and renewables sectors, the group added.

Shares of Seatrium closed flat at S$1.68 on Thursday.