Singapore’s Sembcorp Marine Ltd (Sembmarine) posted a 28 percent drop in its first-quarter profit as rig orders slowed and customers delayed taking deliveries.
Sembmarine reported a profit of S$39.5 million ($28 million)for the three months ended March, compared with S$54.8 million a year earlier.
The company, majority owned by industrial conglomerate Sembcorp Industries Ltd, said revenue dropped 17 percent to S$760.1 million.
“The pace of recovery in the oil and gas sector remains uncertain, and will continue to be impacted by the existing rigs supply overhang,” said Sembmarine Chief Executive Wong Weng Sun.
Sembmarine’s net order stood at S$7.14 billion. Excluding the orders for drillships from rig leaser Sete Brasil, which has filed for bankruptcy protection, its net order book was worth S$4.02 billion.
The company said it has reduced its total workforce by about 9,000 since 2015.
Sembmarine and cross-town rival Keppel Corp have been hit by an oversupply of offshore oil drilling rigs, with customers delaying contracts and orders while oil prices hover at about half their 2014 peak.
Sembmarine said enquiries for its non-drilling solutions were encouraging and that it was “cautiously optimistic” of new orders for production facilities in the next few years.
Nomura analysts said in a note on Wednesday that a slow but sustainable recovery in the south-east Asian offshore and marine sector had begun.
“As offshore drilling picks up and upstream capex trend improves, we expect new orders/earnings for the sector to gradually pick up,” the analysts said.
Sembmarine shares closed down 0.3 percent ahead of the results, while the broader market ended 0.08 percent lower.