Sembcorp Marine's income sank 12.5% to $124.9m

Blame it on lower revenue.

According to OSK DMG, SMM’s 2Q13 net profit declined 12.5% y-o-y to SGD124.9m, accounting for 42%-44% of the firm's and consensus forecasts.

The lower earnings were primarily due to lower revenue (-7.6% y-o-y) and weaker contributions from Cosco. Operating margin was fairly flat y-o-y at 13%.

Here's more from OSK DMG:

We deem the results in line as we expect stronger contributions in 2H13 given higher recognition of projects in its orderbook. NEUTRAL, with a SGD4.65 TP.

2Q13 results in line. 2Q13 net profit of SGD124.9m (-12.5% y-o-y, +5.2% q-o-q) lifted 1H13 net profit to SGD243.6m (-4.8% y-o-y), making up 42%-44% of our and consensus estimates. Revenue dipped 7.6% y-o-y to SGD1.12bn as fewer projects achieved initial recognition. These projects included the upgrading of Ocean Apex, LNG module project and Prosafe accommodation unit.

Operating margin flat y-o-y. 2Q13 operating margin came in at 13.0%, partially boosted by a SGD13.7m gain on disposal. Excluding the gain, 2Q13 operating margin was 11.8%, in line with expectations of 10%-13%. Ship repair remains the highest margin segment.

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