Sembcorp Marine achieved a net profit of $150.6million in 1Q 2011. This was 1.2% higher as compared with $148.8 million for the corresponding period in 2010. This increase was attributable mainly to improved margins driven by higher operational efficiency and productivity gains through execution of repeat rig orders.
Group turnover of $828.9 million was 39% lower as compared with $1.4 billion in 1Q 2010. The lower turnover was due to lower revenue recognition in the rig building sector as new jack-up rigs secured last year are still in the planning stage as compared with more turnkey semi-submersible rig building projects and the resumption of revenue recognition on the completion and delivery of PetroRig III for the corresponding period in 2010.
Group operating profit of $166.1 million was 4.1% higher as compared with $159.6 million in 1Q 2010. At pre-tax level, Group profit at $180.1 million was 2.6% down as compared with $184.9 million in 1Q 2010.
OUTLOOK
The Group has a net order book of S$5.2 billion with completion and deliveries stretching till first quarter of 2014. This includes S$1.5 billion in contract orders secured since the start of 2011, excluding ship repair contracts.
The fundamentals driving the offshore oil industry remain intact given the increase in the exploration and production (E&P) spending budgets of major oil companies and firm oil prices. While the world economy is showing signs of steady improvement that provides support for increasing longer-term energy demand, short-term demand may be affected by recent events in the Middle East, North Africa and Japan.
The market for premium jack-up rigs continues to improve with oil companies remaining focused on safety and efficiency gains offered by newer and higher specification units. The bifurcation in utilisation and pricing between older jackups and newer premium jack-ups is expected to continue with the trend of replacing older equipment with new equipment holding strong. The Group has secured 4 units of high specification jack-up rigs in 1Q 2011 for a total value of US$1.1 billion. This together with the 7 units secured in 4Q 2010, results in a total value of US$2.4 billion, excluding the value of 8 rig options.
With the resumption of the issue of deepwater drilling permits for the US Gulf of Mexico, deepwater drilling activities in the region are expected to resume and improve, albeit slowly. Deepwater drilling activities for the rest of the world are expected to increase with strong growth in demand for development drilling in Brazil and West Africa. With oil companies continuing to focus on new technically superior dynamically positioned deepwater units, Sembcorp Marine will leverage on the opportunities in this sector given its strong track record and proven expertise.
The ship repair market continues to improve with continued demand for bigger docks. The Group has secured several additional long-term contracts from existing and new customers which will provide a stable base-load for the Group’s ship repair sector.
[mappress]
Source: Sembcorp, May 10, 2011.