SembMarine’s net profit sinks 48.2% to 54.8m in Q1

Due to lower contributions from rigs, floaters segments.

When it pours, it rains—Sembcorp Marine (SembMarine)’s challenging Q1 has drawn to a disappointing close. Net profit dropped a whopping 48.2% YoY to $54.8m, on back of a 29.6% YoY plunge to $918.4m.

According to a report by OCBC, the fall in revenue is on back off rigs and floaters segments' lower contributions, which fell 43% YoY to $540m.

On the flip side, the offshore platforms segment saw a 10% rise in revenue at $261m.

In Q1, SembMarine’s gross profit margin stood at 8.8%, compared to 13% in 1Q15.

Meanwhile, capital expenditure slowed to a trickle, coming in at $102m in Q1. OCBC asserts it remains unclear whether the run rate will remain the same for the rest of the year.

“Recall that the group incurred capex of S$905m in FY15 and S$772m in FY14, mostly due to the new yards in Singapore and Brazil. As such, the group’s net gearing only inched up slightly from 1.0x in 4Q15 to 1.1x in 1Q16,” OCBC states.

Q1 also saw net operating cash outflows of $72.9m, due mostly to working capital needs.

Meanwhile, there were net operating cash outflows of S$72.9m in 1Q16, mostly due to working capital needs.

SembMarine expects its working capital needs to be lower in 2016. It also anticipates deliveries of the Hercules jack-up, Noble CJ70 jack-up, offshore platform for Ivar Aasen, and the Libra FPSO project to bring in $1.502b in cash inflow by the end of the year.

However, Hercules has lodged an SEC filing stating that it had inked a forbearance deal with its creditors, and could face problems accepting delivery of the completed unit.

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