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Sembmarine profits fall 15% on lower rigbuilding activity

Sembmarine profits fall 15% on lower rigbuilding activity
Singapore shipyard group Sembcorp Marine (Sembmarine) reported a 15% decline in net profit to SGD215m ($157.4m) hit by low oil prices and reduced capital expenditure in the oil and gas industry.

Revenues also fell 6% in the first half to SGD2.51bn compared to SGD2.68bn a year earlier, which it blamed mainly on lower rigbuilding revenues.

Revenues from the rigbuilding declined 18% year-on-year in the first half to SGD1.38bn. However, offshore and conversion saw a 27% rise in revenues to SGD833m in the period compared to a year earlier.

Commenting on the results the company said: “The persistently low oil prices have escalated the ongoing cuts in global exploration and production capital expenditure. Some customers are deferring or seeking to defer the delivery of their ordered rigs on a lack of charter contracts.”

Asked about further delivery delay requests SembMarine cfo Tan Cheng Tat said that there were discussions with customers over a “handful” of jack-up rigs.

“While the new order outlook for offshore exploration vessels remains bleak, particularly in the jack-up segment which is in an oversupply situation, the group has benefitted from its strategy to diversify its product offering in addition to drilling solutions,” Sembmarine added.

The company recently inked an order for a $1bn for a DP3 new semi-submersible crane vessel for Heerema Offshore Services. This has boosted SembMarine’s new order intake this year to-date to SGD1.35bn with the addition of SGD56m FSO conversion contract for Teekay Offshore.

The two contracts have taken order win value this year to above the SGD1.25bn in orders clinched in 2009 – the yard group’s worst year for new orders in the last decade. The total net orderbook stands at SGD10.9bn.