SINGAPORE (Apr 25): Sembcorp Marine announced an 86% fall in earnings for the first quarter ended March from a year ago.

Earnings for 1Q18 came in at $5.3 million, compared with the restated $37 million in 1Q17, which was mainly due to the absence of a one-off gain from the disposal of Cosco Shipyard in 1Q17 as well as lower contributions from the offshore platforms division.

Excluding the effects on the adoption of SFRS(I) 15, SembMarine says it would have reported a net loss of $33 million for 1Q18 instead.

Revenue for the quarter grew 58.3% to $1.2 billion from $745.6 million a year ago.

This came on the back of higher revenue recognition for rigs & floaters upon the delivery of two jack-up rigs to Borr Drilling, as well as one jack-up rig to BOT Lease (BOTL), the leasing company of The Bank of Tokyo-Mitsubishi UFJ.

Segment-wise, sales from rigs & floaters came in at $1 billion, more than triple the restated segment revenue of $327 million in 1Q17 due to the Borr Drilling and BOTL jack-up deliveries, as well as higher floaters revenue on recognition of the Johan Castberg project.

Sales from offshore platforms however fell to $62 million from $302 million a year ago due to the completion of existing projects.

Meanwhile, revenue from repairs & upgrades totalled $79 million for the quarter, down from $95 million previously on fewer ships repaired compared to a year ago.

In line with the higher turnover, cost of sales grew 55.7% to $1.1 billion from $730.4 million a year ago.

Other operating income fell 38.4% to $10.9 million in 1Q18 from $17.6 million in 1Q17 due to the lower sales of scrap, while other operating expenses grew to $10 million from $0.2 million previously mainly due to a foreign exchange loss booked from the revaluation of assets and liabilities in USD denominations.

In all, the group’s profit on the gross and operating levels for the quarter was $43 million and $20 million, respectively.

In 1Q18, SembMarine says it secured $476 million in new contracts.

However, overall business volume has remained significantly below peak levels, resulting in operating losses in the latest
quarter, Chief Executive Wong Weng Sun said.

"Based on current secured orders, work volume for the foreseeable quarters is expected to remain low, and the trend of negative operating profit may continue," he says.

Nonetheless, the group intends to continue to actively manage its costs to align with business volume, as well as prudently manage its cash flows through securing projects with milestone progress payments to minimise working capital requirements.

Shares in SembMarine closed 3 cents lower at $2.23 on Wednesday.