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Sembcorp Marine's losing streak continues with Q3 net loss

SEMBCORP Marine sank into the red in the third quarter, in its second straight quarter of net losses, despite higher turnover from the sale of a rig.

The offshore and marine company turned in a net loss of S$29.8 million for the three months to Sept 30, against profits of S$100.7 million in the same period the previous year, according to unaudited results released on Thursday.

Group revenue was up by 60.2 per cent year-on-year to S$1.17 billion, on higher revenue recognition for rigs and floaters and for newly secured projects.

But the bottom line still suffered from the sale of the semi-submersible West Rigel rig, which was done at a loss of S$34 million, as well as a continued slump in overall business volume.

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The previous year had also seen a net positive effect from Sembcorp Marine's entitlement to the downpayments on termination of two rig contracts.

The group reported a loss per share of 1.42 Singapore cents, compared with earnings per share of 4.82 Singapore cents previously, while net asset value stood at 111.89 Singapore cents a share, against 116.81 Singapore cents as at Dec 31, 2017.

Reiterating the company's outlook statement, Wong Weng Sun, group president and chief executive, told a results briefing that business volume and activities are expected to remain relatively low in the coming quarters "and the trend of negative operating profit will continue for the current financial year".

Capital expenditure on global exploration and production is expected to improve, but offshore rig orders will take time to recover as the market remains over-supplied, he said.

Mr Wong said that Sembcorp Marine "is responding to an encouraging pipeline of enquiries and tenders for innovative engineering solutions" for production projects in its recent new offshore oil and gas orders, but competition in the repairs and upgrades segment is still intense.

"Challenges in the offshore and marine sector persist, notwithstanding the improved industry outlook," he said. "It will take some time before we see a sustained recovery in new orders, while competition remains intense and margins compressed."

No dividend was recommended for the quarter.

Sembcorp Marine saw a nine-month net loss of S$80.1 million, compared with net profit of S$142.9 million the previous year, when the group notched a gain from the sale of its 30 per cent stake in Cosco Shipyard Group in January 2017.

Meanwhile, revenue jumped 87.2 per cent to S$3.97 billion, supported by the loss-making sale of West Rigel. Excluding that sale and certain jack-up rig deliveries, group revenue for the nine months would have been down 9 per cent year-on-year instead to about S$1.8 billion.

The group had a net order book of S$6.39 billion as at Sept 30, about half of that from Sete Brasil drillship contracts, with some S$730 million worth of new contracts secured in that period.

Sembcorp Marine lost S$0.03 or 1.71 per cent to S$1.72 before the results were announced.