Update: Sembcorp Marine makes S$609m impairment for rigs, sinks into the red for FY15

SEMBCORP Marine made impairment and provisions of S$609 million for rigs, including S$329 million for Sete Brasil drillship projects, for the fiscal year ended Dec 31, 2015, with the view that this down-cycle will be "more protracted than previous cycles".

This dragged the group into a net loss of S$290 million for the year, from a net profit of S$560 million in fiscal 2014. Revenue slipped 15 per cent to S$4.97 billion mainly due to lower revenue recognition from rig building projects.

Before the impairment and provisions, the rig builder racked in S$384 million in net profits (down 31 per cent year on year).

"Several of our customers have requested for delivery deferments in light of delays in chartering out their rigs. Given the current depressed environment in the upstream sector, we have tried to accommodate their requests, while preserving our commercial interests," the group said.

It added that it has already terminated the contract with one of its customers that failed to take delivery of its rig and has taken legal action to recover the amount due to the group.

While earnings were depressed by customer requests for deferment for jackup rigs, profits for offshore platforms and repair and upgrade businesses were higher.

Offshore Platforms revenue rose 10 per cent from a year ago to S$1 billion in FY2015. Despite an increase in the number of ships repaired, revenue from Repairs and Upgrades fell 10 per cent from a year ago to S$557 million due to lower average revenue per vessel reflecting tough competition in the segment.

For the quarter ended Dec 31, SembMarine's revenue was 8 per cent lower from a year ago to S$1.33 billion due to lower revenue recognition from rig building. Impairment and provisions dragged the group into a net loss of S$536.9 million for the fourth quarter, after marking a net profit of S$174 million in the same quarter in 2014.

During the course of last year, Sembcorp Marine secured S$3.2 billion in new orders, which represents a healthy replenishment of order books notwithstanding the challenging macro-environment. With these new contracts, its net order book backlog as at Dec 31, 2015 stands at S$10.4 billion.

The board of directors has recommended the payment of a final ordinary one-tier tax exempt dividend of 2 cents per share, which will bring the total dividend paid for the year to 6 cents, down from 13 cents, previously.