SembMarine – BT

SembCorp Marine’s Q2 net jumps 48%

Company announces 5 cent a share mid-year dividend

SEMBCORP Marine Ltd, the world’s second-largest maker of offshore oil rigs, said second-quarter profit rose 48 per cent, helped by higher operating margins in rig building and ship repairs. Net income increased to $85.1 million, or 5.75 cents a share, from $57.5 million, or 3.91 cents, a year earlier, the company said in a statement to the stock exchange yesterday. Sales were little changed at $1.05 billion in the quarter from $1.04 billion a year earlier.

Oil companies brimming with cash from the highest crude prices ever are expanding the search for new fields to deeper seas, boosting demand for rigs equipped to handle the harshest assignments.

SembCorp Marine and bigger rival Keppel Corp are benefiting because 80 per cent of the world’s production platforms are older than 20 years and need replacing. ‘Oil prices moving to a new high and staying close to a record are good for the stock,’ Ang Soo Kee, an analyst at Daiwa Institute of Research Pte in Singapore, said before the earnings were announced. ‘Rig operators will be more inclined to order more with oil prices staying so high.’

Daiwa has a ‘hold’ rating on SembCorp Marine shares.

Shares of SembCorp Marine have risen 60 per cent this year, outperforming a 15 per cent gain in the benchmark Straits Times Index. The shares fell 10 cents, or 1.8 per cent, to $5.45 yesterday at the close of trading in Singapore. The earnings were announced after the close of markets.

The company announced a mid-year dividend of five cents a share from 2.8 cents in the first half of last year. The board also recommended the issue of two free shares for every five held by shareholders.

Crude oil rose to a record US$78.77 a barrel in New York on Wednesday on concerns about a lack of supplies in the US, the world’s biggest energy user.

SembCorp Marine has secured a record $4.5 billion of orders this year, and its order book stood at $8.3 billion as of June 30 with completion and deliveries until 2010, said the company, which has shipyards in Singapore, China, Brazil and Indonesia.

The company said it continues to benefit from high demand for ship repair and dock space booking.

Rig building fundamentals remain strong with demand trending towards deepwater rigs, SembCorp Marine said in its statement. ‘The sustained higher level of exploration and production spending and the higher oil prices will continue to support the demand for offshore fleet construction.’ – Bloomberg

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