SINGAPORE (Oct 31): Sembcorp Marine reported earnings of $2.7 million in the 3Q ended September, reversing out of losses of $21.8 million a year ago.
This was largely attributable to a foreign exchange gain of $31.3 million in 3Q17, compared to a foreign exchange loss of $18.9 million a year ago. The foreign gain in the current quarter arose mainly from the revaluation of liabilities denominated in US dollar to Brazilian real.
Revenue fell 64.3% to $316.9 million in 3Q17, from $888.0 million a year ago, mainly due to lower revenue recognition for rig building and offshore platforms projects.
Turnover from its offshore platforms division was halved to $149.1 million from $326.4 million a year ago, while turnover from its rigs & floaters division plummeted 95.1% to $21.2 million.
The decline was partially offset by an 18.1% improvement in turnover from its repairs & upgrades division to $124.0 million as well as a 7.6% increase in turnover from other activities to $22.6 million.
Gross profit plunged 82.5% to $12.4 million in 3Q17, from $71.0 million a year ago.
This was mainly due to lower contribution from floaters and offshore platform projects, as well as the effects of contracts termination and inventories written down arising from the sale of nine jack-up oil drilling rigs in October 2017.
General and administrative expenses fell 18.0% to $27.7 million, mainly due to lower personnel-related costs and lower professional fees.
As at end September, cash and cash equivalents stood at $1.06 billion.
SembMarine says it has implemented several workforce optimisation measures as part of its cost management efforts.
Besides redeploying and re-training its workforce as it moves from drilling to non-drilling work, the group adds that it has taken steps to right-size its manpower base through natural attrition, non-renewal and early termination of service contracts.
“We remain steadfast in our commitment to continually train workers to further upgrade their skills, productivity and competitiveness. We will continue to build our talent pool through the selective recruitment of specialist talents with niche skill-sets that will add value to our diversification and growth,” says SembMarine’s president and CEO, Wong Weng Sun.
In its outlook, Wong say global exploration and production spending continues to show signs of improvement.
“Recent stabilisation of drilling rigs day rates and utilisation levels, coupled with increased activities in secondary rigs sales indicate a commencement of recovery in the drilling segment,” he says.
Meanwhile, he adds that enquiries for non-drilling solutions continue to be encouraging.
Shares of SembMarine closed 1.5 cents higher at $1.93 on Tuesday.
