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SembMarine swings into the red in 4Q with $33.8 mil loss

Michelle Zhu
Michelle Zhu2/21/2018 05:59 PM GMT+08  • 3 min read
SembMarine swings into the red in 4Q with $33.8 mil loss
SINGAPORE (Feb 21): Sembcorp Marine (SMM) has announced a loss of $33.8 million for 4Q17, compared to earnings of $34.3 million a year ago, on lower turnover as well as higher costs.
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SINGAPORE (Feb 21): Sembcorp Marine (SMM) has announced a loss of $33.8 million for 4Q17, compared to earnings of $34.3 million a year ago, on lower turnover as well as higher costs.

This brings SMM’s earnings for the full year to $14.1 million, down 82.1% from $78.8 million a year ago.

At the gross and operating levels, SMM reported 4Q losses of $48.2 million at $43.6 million, respectively.

The group attributes its reduction from profitability to lower overall business volume – which in turn impacted the absorption of overhead costs, along with additional cost accruals made during 4Q17 for floater projects that are pending finalisation with customers.

Turnover for the quarter fell 21.1% to $655.0 million from $829.9 million in 4Q16 due to lower rig building revenue, fewer floater and offshore platforms projects.

Excluding effects of the sale of nine jack-up rigs to Borr Drilling as well as the termination of three jack-up rigs with a customer over the quarter, turnover would have decreased by 33%.

See: SembMarine could take $15 mil hit from sale of nine rigs to Borr Drilling for $1.8 bil

Share of loss from associates and joint ventures fell by 68.3% to $1.7 million in 4Q17, from a loss of $5.3 million a year ago.

Other operating income grew to $30.0 million during the quarter, compared to a loss of $2.5 million incurred in 4Q16. This was due to foreign exchange gains arising from the revaluation of Brazilian Real-denominated liabilities to USD, as well as fair value adjustments.

General and administrative expenses fell 14.8% to $24.3 million from $28.6 million previously on lower personnel-related costs, lower professional fees and lower allowance for doubtful debts.

Overall, the 4Q loss has resulted in a loss per share of 1.62 cents for the quarter, compared to earnings per share (EPS) of 1.64 cents a year ago. This brings EPS for FY17 to 0.67 cent, down 82.2% from 3.77 cents in the previous financial year.

Over 4Q, cash generated from operations was $556 million, arising mainly from the upfront payment from Borr Drilling. A net loan repayment of $285 million was made in the quarter, and gross cash increased by $245 million.

As at end December, cash and cash equivalents stood at $1.3 billion.

A final dividend of 1 cent per share has been recommended for the period under review, unchanged from a year ago. If approved, this will be paid out on May 11.

Together with an interim dividend of 1 cent a share paid earlier, the total dividend for FY17 amounts to 2 cents, compared to 2.5 cents in FY16.

In its outlook, SMM notes signs of improvement among global exploration and production (E&P) capex spending; an encouraging production segment; as well as stabilising offshore rigs utilisation and day rates.

The group however stresses that rig orders recovery may take some time to set in as the oversupply in most drilling segments have yet to re-balance. The immediate outlook remains challenging, adds SMM, as it will also take some time for capex spending to translate into new orders.

Shares in SMM closed flat at $2.63 on Wednesday.

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