Published May 9, 2009

SembMarine Q1 profit surges 32% on broad-based growth

By NISHA RAMCHANDANI

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DESPITE the slowing global economy, Sembcorp Marine's net profit surged to $120.2 million for the first quarter ended March 31, 2009, up 31.6 per cent from $91.3 million a year earlier.

Group turnover rose 49 per cent to $1.36 billion on higher ship conversion and offshore, and rig-building activities. Earnings per share grew to 5.85 cents, from 4.41 cents previously.

All three core businesses - rig-building, ship-repair and ship conversion and offshore - enjoyed growth in Q1.

Rig-building revenue grew 57 per cent from a year ago, while the ship-conversion and offshore business registered the highest growth at 80 per cent.

The group has a net order book of $8.42 billion, with completion and deliveries taking place until early 2012.

Contributions from associates and joint ventures dropped 55 per cent in Q1 to $15.3 million, largely due to a lower contribution from Cosco Shipyard Group Co.

Net cash is up 75.7 per cent to $1.89 billion.

'The long-term fundamentals driving future deep-water activities continue to be strong, with the futures market pointing to a rebound in oil and gas prices,' Sembcorp Marine said in a statement.

Deep-water rig activity has not been affected as many major players are taking a long-term view and plan to increase or maintain exploration and production spending, it said.

For ship-repair, Singapore's location and reputation as an international maritime centre, combined with the group's strategic partnerships, are expected to cushion the impact of the economic downturn.

The market for large floating production storage and offloading (FPSO) units and production platforms - projects that generally have longer gestation periods - is expected to remain robust.

Notwithstanding current challenges caused by the economic downturn, as well as possible deferrals and cancellations because of the credit crunch, Sembcorp Marine does not expect any material adverse impact on its performance.

Its shares gained five cents to close at $2.75 yesterday.