SembMarine Q2 loss narrows to S$8.5m

SEMBCORP Marine (SembMarine) on Tuesday posted a narrower second-quarter net loss of S$8.5 million, compared with S$55.6 million a year ago, on the back of "continued low overall business volume".

This had impacted the absorption of overhead costs, offset by margin recognition from newly clinched production floater projects and rig delivery, the rig builder said in a regulatory update.

The group also saw the accelerated depreciation of S$11 million booked for the second quarter, along with S$6 million tax credit booked for the same period.

For the three months ended June 30, the group's loss per share (LPS) stood at 0.41 Singapore cent, compared with 2.66 cents a year ago. There is no dividend declared for the quarter.

Revenue for the year fell 55.1 per cent to S$731.3 million, from S$1.63 billion a year ago, mainly due to lower revenue recognition from rigs and floaters and offshore platform projects. This was mitigated by higher repair and upgrade revenue.

Revenue for the rigs and floaters segment fell 61.1 per cent to S$542.4 million, from S$1.39 billion a year ago. The offshore platforms segment fell 60 per cent to S$34 million, from S$84.9 million a year ago.

Meanwhile, the repairs and upgrades segment saw revenue rise 13 per cent to S$142.4 million, from S$126 million a year ago.

For the first half of the year, the group's net loss narrowed to S$6.8 million, from S$50.3 million a year ago. LPS stood at 0.33 Singapore cent, compared with 2.41 cents a year ago.

Revenue fell 45.1 per cent to S$1.54 billion, from S$2.81 billion a year ago. By segment, revenue for rigs and floaters fell 49.3 per cent to S$1.22 billion from S$2.41 billion a year ago. This was due to revenue recognition on the delivery of jack-up rigs and the sale of a semi-submersible rig for the same period last year.

Revenue from this segment for the first half this year was mainly contributed by higher percentage recognition from drillship and floater projects.

For the offshore platforms segment, revenue fell 66.7 per cent to S$49.1 million from S$147.3 million a year ago due to a lack of large-scale contracts recognised for the period. This was also due to low initial revenue recognitions from the Hornsea II windfarm substations and Tangguh module projects, the group said.

Meanwhile, revenue from the repairs and upgrades segment rose 19.8 per cent to S$244.9 million from S$204.5 million a year ago, due to higher value of work done per vessel. A total of 153 vessels were repaired and upgraded at SembMarine's yards for the first half of 2019, compared with 158 units a year ago.

Average revenue per vessel rose to S$1.6 million, compared with S$1.3 million a year ago, due to improved vessel mix of higher-value works.

On outlook, SembMarine said it is responding to enquiries and tenders for various engineering solutions and projects related to the production and gas value chain segments.

"Overall, challenges in the offshore and marine sector persist, and it will take some time before we see a sustained recovery in new orders, while competition remains intense and margins compressed," the group said.

With insufficient new orders secured in the last few quarters, the group is expecting losses for the second half to be higher than the first half, with full-year losses projected to be similar in range to last year's losses.

It added that it is actively pursuing new orders and will execute existing orders efficiently.

The counter for SembMarine closed flat at S$1.43 on Monday, before results were released.