(Refiles to remove extraneous word 'percent' in paragraph 11)
* Q4 profit S$34 mln vs S$537 mln loss year prior
* Q4 revenue falls 38 pct to S$830 mln
* Annual revenue lowest since 2006
SINGAPORE, Feb 22 Singapore's Sembcorp Marine
Ltd (SembMarine) swung to profit in the fourth quarter
of 2016 after provisions pulled the rig builder into a loss the
year earlier, but a downturn in oil prices pushed annual revenue
to its lowest in a decade.
SembMarine and compatriot Keppel Corp Ltd have
been suffering from an oversupply of offshore oil drilling rigs,
with customers delaying contracts and refraining from placing
orders while oil hovers at about half its 2014 peak.
"While prospects for the oil & gas industry have taken a
more positive turn following the November 2016 agreement by OPEC
and major non-OPEC countries to cut production, we believe a
more robust recovery may take longer," SembMarine said in a
statement, referring to the Organization of the Petroleum
SembMarine, majority-owned by conglomerate Sembcorp
Industries Ltd, posted S$34 million ($24 million) in
profit for the three months through December, versus a S$537
million loss a year prior. Revenue fell 38 percent to $830
Profit for the full year stood at S$79 million, versus a
2015 loss of S$290 million, while revenue fell 29 percent to
S$3.545 billion. The revenue decline was the steepest on record,
and the amount was the lowest since 2006, Thomson Reuters data
New orders stood at S$320 million at December-end, with net
orders at S$7.8 billion. Excluding drillship orders from rig
lessor Sete Brasil, which has filed for bankruptcy protection,
SembMarine's order book was worth S$4.7 billion.
To ride out the industry downturn, SembMarine and Keppel
have been focusing on cost-cutting and have reduced workforces
by thousands. SembMarine has also frozen salaries since 2015.
The rig builder said it believed its current provisions were
adequate and that it has made no additional provisions since
Last month, Keppel posted its lowest annual profit in a
decade. It said it had mothballed two overseas yards and was
closing three yards in Singapore.
SembMarine's shares closed 0.66 percent higher ahead of the
earnings results. The wider market closed up 0.9 percent.
The rig builder had a debt-to-equity ratio of 1.36 at the
end of September, the highest among capital goods firms in
Analysts expect SembMarine to cut capital expenditure by
38.7 percent over the next 12 months, according to Thomson
Reuters StarMine SmartEstimates. That would be the biggest cut
among Singaporean capital goods firms.
(Reporting by Marius Zaharia and Aradhana Aravindan; Additional
reporting by Gaurav Dogra; Editing by Christopher Cushing)