Group revenue down for Sembcorp Marine

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Sembcorp Marine posted Group revenue of $2.39 billion for the 12 months to December 31, 2017 compared with $3.54 billion in revenue generated the previous year.

The lower revenue was largely due to lower sales from all key business segments with the exception of Repairs & Upgrades, as well as a reversal of previously recognised rig sales upon the termination of contracts with original customers.

Rigs & Floaters reported a turnover of $1.10bn in FY 2017, a 42% decline from the $1.89 billion booked in the previous year on lower revenue from drillships, other rigs and floaters. Following the termination of five jack-up rigs contracts with their original customers during the year, there was also a reversal of sales from the projects. This was partially offset by revenue recognition from ongoing semi-submersible projects and the delivery of an FPSO.

Offshore Platforms revenue declined 34% year-on-year to $732 million in FY 2017from $1.12 billion in FY 2016 due to fewer projects on hand. Repairs & Upgrades revenue totalled $471 million, a 3% year-on-year increase from $460 million in FY 2016. While fewer ships were repaired, the average revenue per vessel was higher due to an improved vessel mix with more higher-value works.

Gross profit for FY 2017 was $61 million, while Operating profit for FY 2017 decreased to $20 million. Net profit for FY 2017 totalled $14 million, compared with FY 2016 net profit of $79 million. The reduction in profitability was due to lower overall business volume which impacted the absorption of overhead costs, and additional cost accruals made during Q4 2017 for floater projects, which are pending finalisation with customers.

Non-operating gain on divestment of Cosco Shipyard Group and the disposal of Cosco Shipping Singapore stake (formerly Cosco Corp) was partially offset by provisions and impairment for associate and joint venture companies.

On a quarterly basis, Group turnover for 4Q 2017 at $655 million was 21% lower compared with $830 million for the same period in 2016. The lower revenue was due to lower rig building revenue, fewer floater and offshore platforms projects. The Group reported losses of $48 million at the gross level and $44 million at the operating level. This was due to lower overall business volume which impacted the absorption of overhead costs, and additional cost accruals made during Q4 2017 for floater projects, which are pending finalization with customers.

Net debt decreased, with net debt to equity at 1.11 times at end of FY 2017 compared with 1.13 times in FY2016 and 1.31 times at 9M 2017. Cash flow from operating activities (before working capital changes) was $203 million in FY 2017. Cash generated from operations was $144 million mainly due to receipts from ongoing and completed projects.

In 4Q 2017, 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.

 

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