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Sembmarine profit up, orderbook will support it through 2015 rigbuilding downturn

Sembmarine profit up, orderbook will support it through 2015 rigbuilding downturn
Sembcorp Marine (Sembmarine) made a SGD601.2m ($442.2m) profit in 2014, but it expects a tougher market in 2015.

The result improves on 2013's SGD588m profit by 2.2%, with turnover rising by 5.6% to SGD5.8bn. The Singapore shipyard group attributed its rise in profit and revenue to increased revenue recognition from rigbuilding projects in the first three quarters of the year, and offshore and conversion projects.

For the fourth quarter, profit was down 1.4% compared to the previous year to SGD193.4m as revenue recognition on rig building projects fell.

The shipyard group noted that oil and gas companies have begun deferring projects as the price of oil has dropped in recent months, increasing pressure on offshore yards. "The group continues to face tough competition in upcoming tenders for new projects in the offshore exploration and production sectors," the company stated in its earnings release.

Sembmarine believes that continued demand for ship repair, upgrading and life extension work, particalrly in the passenger/cruise and LNG carrier sectors, will help soften the impact of any downturn in its rigbuilding activities. Ship repair and offshore conversion contributed 11% and 23% of revenues respectively in 2014.

In 2014 the company secured SGD4.2bn in new contracts and has net orderbook of SGD11.4bn. Sembmarine has major exposure to the Brazilian offshore market and this week denied reports of alleged bribery in contracts with embattled state oil and gas firm Petrobras.

"We remain well positioned to benefit from the upturn with our expanded product capabilities, state-of-the-art facilities and sound track record. Our performance in 2015 will be supported by our order book," the company stated.