Swiber sees slump in earnings but says momentum picking upCompany News // May 15, 2015
Swiber Holdings Limited has reported a slump in its earnings for the three months ended 31 March 2015 (first quarter 2015) but says it is clearing the deck for a business pick-up in the coming months.
Net profit for the group stood at US$70,000 against US$52.8 million. Net attributable loss to shareholders amounted to US$1.3 million compared to a profit of US$48.0 million in the same period last year.
The declines were due mainly the depletion of the group’s orderbook last year, and the absence of a US$95.1 million gain from the disposal of a group of subsidiaries which bolstered the previous comparable numbers.
Reflecting last year’s slimmer pipeline, group revenue fell 17.3 per cent to US$164.9 million compared to US$199.5 million in the first quarter of 2014.
During the quarter under review, revenue from Latin America contributed 69 per cent or US$113.8 million, with the balance coming from East Asia, South Asia, Southeast Asia and other markets.
The group’s gross profit margin improved to 11.8 per cent in the first quarter from 4.5 per cent in the previous corresponding period after more stringent controls were imposed over operating costs.
Other operating income decreased by 97.0 per cent to US$2.9 million from US$97.1 million, reflecting the absence of gain on disposal of group of subsidiaries of US$95.1 million
The share of profit from associates and joint ventures fell 51.5 per cent to US$4.8 million in the first quarter of 2015 as a result of lower contribution from the Indonesia associates.
Deputy Group Chief Executive Officer Darren Yeo said: “We had a difficult first quarter which was expected given the smaller pipeline of contracts last year. With our pipeline now standing at a record US$1.8 billion, we believe we are well positioned for a strong turnaround especially in the second half.
“We are working hard at maintaining the momentum of new awards and are cautiously optimistic that we will continue to gain traction in the coming months.”
Mr Yeo added that Swiber’s EPIC business caters mainly to the field development rather than exploration stage of the production cycle in the oil and gas industry, which is more vulnerable to changes in oil prices. Its projects are also in shallow water, which have lower break-even costs.
“In view of these factors, the group believes its business would be less affected by the industry’s expenditure cuts and that it is in a better position to capitalise on future bidding opportunities,” Swiber said.