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Sembcorp profits halve in first quarter
Tuesday, 03 May 2016 16:47

The quarterly profits for Singapore shipbuilder Sembcorp Marine have halved due to deferred projects from customers as the oil industry continues to struggle.

From the start of the year to the end of March, Sembcorp recorded a turnover of S$918 million (US$685 million) and a profit of S$81 million, down from S$1.3 billion and S$169 million respectively across the same period in 2015.

Turnover for rigs and floaters was $540 million across the quarter, a 43 per cent decline from the $947 million booked in the previous corresponding period. Sembcorp believes the decline was largely due to lower revenue recognition for the rig building projects resulting from customer deferment requests and customer restructuring. Floaters revenue was higher.

The group delivered one accommodation semi-submersible vessel to Prosafe and one FPSO conversion to Modec during the three-month period.

Group earnings were also depressed as customer requests for deferment resulted in lower margin recognition for rig building projects. However, this was partly offset by higher margin recognition from floaters and offshore platform projects.

In a statement, Sembcorp Marine said this down-cycle is likely to be more protracted than previous cycles and that it will have to maintain a cautious outlook.

One of the company’s current clients with seven contracts on Sembcorp’s books, Sete Brasil, has announced it is currently seeking bankruptcy protection. Sembcorp’s subsidiary PPL Shipyard has also commenced legal action in the Singapore High Court against Marco Polo Drilling for failure to make payments late last year.

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