SEMBCORP MARINE: OFFSHORE RIG ORDER RECOVERY WILL TAKE TIME

July 24, 2018

Sembcorp Marine posted Group revenue of $2.81 billion for the six months to June 30, 2018. This compares with $1.39 billion in revenue generated in 1H 2017. The higher revenue in 1H 2018 was largely due to revenue recognition on delivery of 4 jack-up rigs to Borr Drilling, 1 jack-up rig to BOTL, sale of the West Rigel semi-submersible rig (West Rigel) and higher percentage recognition for ongoing drillship and offshore production projects in 1H 2018.
The Group posted 1H 2018 operating loss of $33 million and a net loss of $50 million. This compares with a net profit of $42 million in 1H 2017, which was mainly due to a gain of $47 million from the sale of Cosco Shipyard Group. 1H 2018 loss was due to (i) lower overall business activities with key orders secured in 2015 substantially completed while new orders secured since end 2017 are at early execution stage; and (ii) sale of West Rigel, which was completed and recognised in 2Q 2018 at a loss of $27 million.
Sembcorp said: “Offshore rig order recovery will take some time as the market remains oversupplied, particularly for jack-up rigs. There are some pockets of initial demand for mid and deep water rigs. The majority of new orders have been for offshore production projects. This trend is expected to continue and Sembcorp Marine is responding to an encouraging pipeline of enquiries and tenders for innovative engineering solutions.
Competition in the repairs and upgrades segment remains intense. The segment will be underpinned by regulations that require ballast water treatment systems and gas scrubbers to be installed over the next two to five years.
We will actively pursue the conversion of as many enquiries into new orders, execute existing orders efficiently and position the Group well for the industry recovery.” (Source: Sembcorp)