Published November 5, 2008
SembMarine Q3 profit jumps 73% to $141m
Revenue down slightly; operating profit nearly doubles to $142.1m
By VINCENT WEE

Email this article

Print article

Feedback
RIG builder Sembcorp Marine continued to grow strongly in the third quarter with a 73 per cent rise in earnings to $140.9 million but turnover fell slightly to $1.14 billion from $1.17 billion a year ago.

Earnings boosters: Higher operating margins from rig building and shiprepair businesses and better contribution from associates nearly doubled operating profit
Operating profit nearly doubled to $142.1 million from $74.1 million previously due to higher operating margins from rig building and shiprepair businesses and better contribution from associated companies.
Gross profit margin improved from 8 per cent previously to 14 per cent. This was higher than the second quarter's 10 per cent and FY 2008's margin is expected to gradually trend upwards, SembMarine said.
General and administrative expenses, however, also rose 41.8 per cent from $21.5 million to $30.4 million mainly due to higher personnel-related costs as staff numbers rose due to more projects undertaken. Earnings per share rose from 3.92 cents to 6.8 cents in the third quarter.
By segment, rig-building revenue dipped 2.7 per cent to $631.4 million and offshore and conversion revenue fell 6.9 per cent to $285.2 million in the third quarter.
But repair revenue jumped 11.3 per cent to $210.7 million. For the first nine months, turnover rose 8.5 per cent to $3.45 billion from $3.18 billion previously. Profit rose 50.1 per cent to $360.5 million.
But the current global financial outlook and economic conditions are challenging, SembMarine warned.
The group, however, has a strong net order book of $9.9 billion extending out to 2012 comprising rig building, ship conversion and offshore projects. This includes new orders of $5.5 billion secured since January.
SembMarine expects shiprepair demand to remain strong amid global tightness in yard capacity while the fundamentals for the offshore sector remain intact.
'In the long term, exploration and production (E&P) activities will continue, in order to replace declining global oil and gas reserves and to increase production,' SembMarine said.
Although the current financial turmoil has a dampening impact on world economy and global demand for oil, SembMarine is confident that the long-term fundamentals and outlook for the marine and offshore industry remain positive.
SembMarine shares closed two cents lower at $1.93 yesterday.