Singapore’s rig builder Sembcorp Marine returned to profit for the fourth quarter 2016, versus the year-before period, despite decrease in revenue, which was mainly due to lower recognition for rig building projects resulting from delivery delays.
SembMarine on Wednesday posted a net profit of S$34 million for 4Q 2016 as opposed to a loss of S$537 million in the same period of 2015 which was due to write-downs of inventories and work-in-progress, provision for foreseeable losses for rig building projects and share of loss from associates.
The company’s turnover for 4Q 2016 was S$830 million, 38% lower compared with S$1.33 billion in 4Q 2015. Rigs and floaters revenue declined 42% on lower revenue recognition of drillship projects. Lower revenue recognition from its projects also contributed to a 32% decline in Offshore Platforms. Repairs & Upgrades revenue dropped 31% on lower average revenue per vessel repaired and a slight drop in the number of vessels repaired.
The company’s net order book as at FY 2016 stands at $7.84 billion with deliveries and completion stretching till 2020.
Earlier recovery for fixed platforms
Looking ahead, the company said it believes that a more robust recovery may take longer despite a more positive turn in the oil & gas industry prospects following the November 2016 agreement by OPEC and major non-OPEC countries to cut production. Despite the challenging outlook and intense competition, the company believes that growth prospects for the offshore and marine industry remain positive in the medium to long-term.
However, with increasing inquiries for non-drilling solutions, Sembcorp Marine foresees an earlier recovery in demand for fixed platforms, FPSO and FSO conversions and new-builds in the next few years. Rising global demand for gas also augers well for its broad-based LNG solutions and capabilities.
“We believe these are the key segments that will offer opportunities in 2017,” the company said.
The group’s strategy focuses among other things on managing financial resources to preserve financial flexibility and ensure overall business sustainability.
Offshore Energy Today Staff