SINGAPORE (Nov 13): SembCorp Marine reported a net loss for 3Q19 ended Sept on higher operating losses.
For 3Q19, net loss came in at $52.6 million, or 2.52 cents, compared with a net loss of $29.8 million, or 1.42 cents, in the same period last year.
SembMarine says the weaker bottomline was partly due to lower business activities and the accelerated depreciation of $10 million arising from the group’s transformation and yard consolidation strategy. In addition, the higher than expected loss also resulted from additional costs for rigs & floaters projects.
However, this was offset by margin recognition from newly secured production floater projects and rig delivery.
In its outlook statement, SembMarine says it expects the trend of losses to continue into 4Q, and the full-year loss to be higher than last year.
“Challenges in the offshore and marine sector persist and competition remains intense. Activity levels in all segments remain low except for repairs and upgrades, which continues to improve, underpinned by the cruise ship segment, and IMO (International Maritime Organization) regulations that require installation of ballast water treatment systems and gas scrubbers,” says SembMarine in its Wednesday filing before the market opening.
As at 11.34am, shares in SembMarine are down 5 cents or 3.7% at $1.29.
For the third quarter under review, revenue fell 39% to $717.2 million, compared with $1.17 billion a year earlier which was due to revenue recognition on delivery of two jack-up rigs.
Excluding the effects of delivery of two jack-up rigs to Borr Drilling in 3Q19, revenue would have been $773 million.
As at end Sept, the group’s net debt totalled $3.68 billion. Net debt to equity ratio was 0.96 times, compared with 1.42 times as at June 30. The group also had net current liabilities totalling $297 million, as a result of reclassification of current portion of long-term borrowings.
SembMarine says this will be re-profiled following the partial repayment of $1.5 billion of borrowings drawn from the recent $2 billion subordinated loan facility.
On Oct 7, SembMarine announced that it had reached a full and final settlement of the claims under all seven drillship contracts signed with the Sete Brasil Group.
Under the settlement, the title to five of the seven drillships will be retained by the group, while the titles to the remaining two which are in the most advanced stage of construction) will be shared between the group and Sete Brasil in proportion to payments received by the group from Sete Brasil.
“Sete Brasil has selected Magni Partners as a purchaser of the two drillships. The Group is in negotiation with Magni Partners to enter into new contracts to complete the drillships,” says SembMarine.
