Sembcorp Marine in the red again with Q3 net loss of S$29.8m

Singapore

SEMBCORP Marine sank into the red for the second straight quarter, hampered by the loss-making sale of a semi-submersible rig and low business volumes overall.

The group chalked up a third-quarter net loss of S$29.8 million for the three months to Sept 30, against profits of S$100.7 million the year before, according to unaudited results released on Thursday.

Group revenue was up by 60.2 per cent on the previous year to S$1.17 billion. Growth was fuelled by the rigs and floaters segment, where turnover more than doubled on the delivery of two jack-up rigs and revenue recognition for newly secured projects.

But the rise in turnover was a more modest 6.5 per cent in the repairs and upgrades division. Revenue from the offshore platforms business crashed by 83.2 per cent, and contributions from other activities were flattish.

The low overall business volume affected the group's absorption of overhead costs, Sembcorp Marine noted in its financial statements. President and chief executive Wong Weng Sun told a results briefing that, shorn of one-off items, Sembcorp Marine has faced narrowing operating losses since the fourth quarter of last year.

The West Rigel rig was sold late last year at a loss of S$34 million.

Mr Wong said that business is expected to remain relatively low in the coming quarters "and the trend of negative operating profit will continue for the current financial year".

The group posted losses per share of 1.42 Singapore cents for the quarter, down from earnings per share of 4.82 Singapore cents previously. No dividend was recommended.

It said in its outlook statement that challenges persist in the offshore and marine sector, despite expectations of higher capital expenditure on exploration and production and "an encouraging pipeline of enquiries and tenders for innovative engineering solutions" amid new offshore oil and gas orders for production projects.

Margins have been compressed and the offshore rig market is still over-supplied, while competition in the repairs and upgrades segment remains intense, the group said. "It will take some time before we see a sustained recovery in new orders."

Sembcorp Marine's nine-month net loss was S$80.1 million, against a profit of S$142.9 million before, while revenue rose by 87.2 per cent to S$3.97 billion on the West Rigel sale.

The group had a net order book of S$6.39 billion as at Sept 30 - down from S$7.58 billion the year before - with about half of that coming from Sete Brasil drillship contracts.

The counter was down by S$0.03, or 1.71 per cent, to S$1.72, before the results were announced.