Sembcorp Marine achieved a 4% year-on-year increase in net profit from $244 million to $254 million for the six months ended 30 June 2014, amid still challenging market conditions.Group turnover for the first half of 2014 grew 23% year-on-year to $2.68 billion, which compares with $2.17 billion for the corresponding period in 2013. The higher revenue came mainly from increased contribution from the Group’s rig building activities and from offshore platform projects.

In 1H 2014, Group EBITDA (earnings before interest, tax and depreciation) increased by 6% year-on-year to $359 million, while operating profit grew 5% to $303 million, from $290 million in the previous corresponding period. This was despite a decline in other operating income to $16.6 million.

At the pre-tax level, Group profit of $321 million was 5% higher than the $305 million achieved in the first half of last year. Associate and joint venture income increased 55% to $17.5 million.

Turnover for the Rig building sector increased 36% year-on-year from $1,226 million to $1,670 million. The Group delivered six jack-up rigs in the first half, with another eight in the work in progress stage.

The Fixed platform segment registered a 30% increase in revenue from $413 million to $535 million in 1H 2014, with two major project deliveries in 2Q 2014.

Offshore and conversion revenue declined 40% from $206 million in 1H 2013 to $123 million in 1H2014, with just one project delivery during the period.

Ship repair revenue was 2% lower at $307 million in 1H 2014 compared with $314 million in the corresponding period in 2013 due to timing in recognition of repair projects.

Key highlights:

•    Group revenue increased 23% year-on-year to $2.7 billion in 1H 2014.

•    Group remained in net cash position of $0.9 billion.

•    Return on equity (ROE annualised) at creditable 19%.

•    The Group secured $2.5 billion in new contracts in 1H 2014, bringing net order book to $12.7 billion as at 4 August 2014.

2Q 2014 VERSUS 2Q 2013

On a quarterly basis, Group turnover for 2Q 2014 at $1,341 million was 19% higher as compared with $1,124 million for the same period in 2013.
Group gross profit of $194 million was 36% higher on year-on-year basis while operating profit was 6% higher at $154 million, mainly due to foreign exchange differences and lower gain on disposal of property, plant and equipment.

Group pre-tax profit was 6% higher at $165 million helped by higher associate and joint venture contributions.

Net profit in 2Q 2014 grew 5% year-on-year to $132 million compared with $125 million in 2Q 2013, largely due to higher profit contribution from the Group’s rig building and fixed platform segments.

INTERIM DIVIDEND

The Board of Directors of Sembcorp Marine is recommending the payment of a one-tier tax-exempt dividend of 5.00 cents per share, the same amount as paid in 1H 2013.
The one-tier tax-exempt interim dividend will be paid on 29 August 2014.

OUTLOOK

The Group has a net order book of $12.7 billion with completion and deliveries stretching into 2019. This includes a total of $2.5 billion in new rig and offshore conversion contracts secured since the start of 2014, but excludes repair and upgrade contracts.

Long term fundamentals driving the offshore exploration and production (E&P) market remain stable. However, slow down in capital expenditure may impact new orders and keen competition continues to exert pressure on margins. The strong underlying trend toward high specification, harsh environment jack-up drilling units and deepwater and ultra-deepwater floaters is expected to drive offshore capex spend, and the Group is well positioned to benefit given its broad product offering and strong execution track record. The pipeline for new projects is encouraging, based on robust enquiry levels.

Overall, our repair business continues to see increase in market share. However, despite the larger number of vessels, the average revenue per ship remained low in view of market conditions.

The Group’s four new dry docks at Sembmarine Integrated Yard @ Tuas (SIY@Tuas) continue to see full utilisation for vessels undergoing repair, upgrades & conversion or building. With its broad range of capabilities and leading edge technology, the SIY@Tuas yard will position the Group for long term sustainable growth. The yard has attracted and continues to attract alliance and new customers as services continue to be ramped up.

Construction of Estaleiro Jurong Aracruz, Sembcorp Marine’s wholly owned shipyard in Brazil, is on track to commence initial operations in 2H 2014, and is scheduled for completion in 2015.
Source: Sembcorp Marine