SINGAPORE (April 27): Sembcorp Marine posted 1Q earnings of $39.5 million, down 27.9% from a year ago on lower sales. The group booked a gain of S$47 million from the divestment of its 30% stake in Cosco Shipyard Group Co. which was completed in January.

Revenue for the three months ended March fell 17.2% to S$760.1 million. Turnover for rigs & floaters was S$347 million for 1Q17, a 36% decline from the S$540 million booked in the previous year, due to lower revenue from drillships and other rigs. This was partially offset by revenue recognition from ongoing floater projects, and the completion and delivery of an FPSO vessel.

Offshore Platforms revenue increased 16% year-on-year to S$302 million in 1Q17, from S$261 million in 1Q16, on higher recognition of ongoing offshore platform projects and LNG topside modules.

Repairs & Upgrades revenue declined 9% year-on-year from S$99 million in 1Q16 to S$90 million in 1Q17. Fewer ships were repaired although average revenue per vessel mix with more higher-value works.

Operating profit for 1Q17 decreased mainly due to lower contribution from rig building projects and costs incurred incurred for a floater project which is pending finalisation with the customer.

In its outlook, Sembcorp Marine says oil prices appear to have stabilised. Global exploration and production spending is expected to increase in 2017, compared to the last two years.

Enquiries for non-drilling solutions continue to be encouraging. We are cautiously optimistic of new orders for production facilities in the next few years.

Customer interest in out broad-based LNG solutions and capabilities remains strong, as global demand for gas is on the rise. We are making steady progress in the development and commercialisation of our Gravifloat technology for near-shore gas infrastructure solutions. However, it will take time for such efforts to translate into orders.

Shares of Sembcorp Marine closed at S$1.73 before the announcement.