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A global leader in marine engineering, we specialise
in ship repair, shipbuilding, ship conversion, rig construction
and offshore engineering. We have an established global
presence with seven strategically located shipyards
in Brazil, China, Indonesia and Singapore. With a combined
docking capacity of 2.3 million dead weight tonnes (dwt),
we have the largest ship repair and marine-related facilities
east of the Suez.
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Operations
Review | Outlook
| Our Long-term Strategic Alliances
| Orderbook | Global
Network of Shipyards
Operations Review
Revenue from our Marine Engineering business
remained healthy at S$1,068.0 million, with the improvement
over 2002 due to an increase in both ship conversion
and newbuilding job volume. Ship repair revenue however
declined mainly due to the severe acute respiratory
syndrome (SARS) outbreak experienced during the first
half of 2003 as well as the postponement of vessel repairs
as a result of high freight rates.
Net earnings contribution from SembCorp Marine (SembMarine)
to the Group declined from S$57.3 million to S$49.0
million. The decline was mainly due to the subdued performance
in ship repair as well as the lower exceptional gain
in 2003 compared to 2002. Although starting from a small
base, our overseas hubs such as Mauá Jurong in
Brazil and Dalian COSCO Marine Engineering in China
provided steady and growing contributions.
Our orderbook carried over to 2004 was a healthy S$1.1
billion. In 2003, we secured four contracts worth a
total of S$220 million from Wan Hai Lines to design
and build four units of 2,600 TEU container vessels.
We also secured contracts worth S$137 million, comprising
two Floating Production Storage Offloading (FPSO) conversions
for Modec International and one unit of pipe-lay barge
conversion for Consolidated Projects. In ship repair,
our long-term strategic alliances with customers continue
to provide us with the baseload orderbook, and in 2003
made up about 20% of our ship repair revenue. Together
with our regular customers, they made up 82% of our
total ship repair revenue for 2003. Over the years,
our alliance partners and regular customers have consistently
contributed over 80% of our ship repair revenues.
We delivered several key projects this year. We completed
conversions on the 356,400 dead weight tones (dwt) FPSO
Fluminense and the 357,023 dwt Floating Storage Offloading
(FSO) Kome-Kribi 1 for Modec International. The Saipem
3000, a crane barge conversion and the W.D. Fairway,
the largest trailing suction hopper dredger were delivered
to owners Saipem and Boskalis Westminster respectively
during the year. We also delivered the 2,500 TEU container
vessel “Thomas Mann” to German shipping
company, Reederei Karl Schlüter. Thomas Mann is
the largest and most sophisticated newbuild containership
subsidiary Jurong Shipyard has built to date.
In 2003, we upped our stake in PPL Shipyard from 50%
to 85% in line with our concerted effort to enter into
the rig business. With the majority stake in PPL shipyard
complemented by SembMarine’s other facilities
and capabilities, we are now better positioned to grow
our offshore business. PPL Shipyard will be undertaking
the US$110 million contract to construct one unit of
the Baker Marine Pacific Class 375 Deep Drilling Offshore
Jack-up, a proprietary design it developed.
In 2003, our wholly-owned subsidiary Dolphin Shipping
Company also entered into a joint venture with Pacific
Carriers to operate and service offshore supply boats.
Meanwhile, we streamlined our investments in China
with the disposal of our entire stake in Bohai Sembawang
Shipyard for S$25.3 million to our joint venture partner
China Offshore Oil Bohai Corporation. With this, we
are now better positioned to focus on our COSCO partnership
to enhance participation in the growing ship repair
market in China. In 2003, we also disposed our entire
stake in Jurong Engineering for S$10.7 million.
Outlook
Our orderbook carried over into 2004 remains
strong at S$1.1 billion with deliveries and completions
from 2004 to the second quarter of 2006. Based on the
scheduled completion of projects, SembMarine expects
to improve its operating profit in 2004.
Market fundamentals for FPSO/FSOs remain buoyant and
the outlook for offshore rig utilisation strong particularly
in West Africa, Brazil and the Asia-Pacific region.
Due to aging rig fleets, there is ongoing demand for
the repair and upgrading of the existing fleet as well
as opportunities for the newbuilding of offshore rigs.
In view of the strong fundamentals in this market, we
expect a growth of 10% to 15% in the revenues from our
offshore businesses.
Ship repair in Singapore will remain competitive with
increasing competition from low cost centres around
the region. This together with strong freight rates
will continue to put pressure on our ship repair activities
for 2004. However ship owners will continue to repair
their vessels due to more stringent requirements. Our
long-term strategic alliances with our customers and
the advanced block bookings that we have secured to
date will also cushion such effects and provide us with
a steady and growing baseload for 2004.
As we continue to strengthen our home-based shipyards
to provide complementary facilities and capabilities,
our Global Hub Strategy of building a strong international
network of shipyards will enable us to continue to dominate
the marine engineering market against the backdrop of
increasing competitive pressure. This strategy is bearing
fruit, and we expect contributions from our overseas
yards, namely in Brazil and China, to grow 20% in 2004.
Our
Long-term Strategic Alliances
| Alaska Tanker |
USA |
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| BHP & T-Billiton |
Australia |
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| BP Shipping |
United Kingdom |
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| Chevron Texaco Shipping |
USA |
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| JO Tankers |
Norway |
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| Kumaiai Senpaku |
Japan |
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| NOL Shipping |
Singapore |
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| Primorsk Shipping |
Russia |
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| PT Humpuss Intermoda |
Indonesia |
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| Shell Shipping |
United Kingdom |
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| Tschudi & Eitzen |
Norway |
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| V Ships of Monaco |
Monaco |
Orderbook
As of end December 2003, our orderbook for
Marine Engineering was S$1.1 billion at the Group level.
| Sector |
Project |
Total Value for Sector
(S$m) |
Client |
Completion Date |
|
| Ship conversion and offshore engineering |
 |
Conversion of a VLCC to an FPSO
unit (P-50) |
|
424 |
Petrobras Netherlands |
End 2nd quarter 2004 |
|
To complete, outfit
and commission an offshore dynamic positioning
Class 3 pipe-lay/ construction barge |
|
269 |
Consolidated Projects |
1st quarter 2004 |
|
TT Nina-FPSO conversion |
|
259 |
Modec International |
4th quarter 2004 |
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MT Fairway-FPSO
conversion |
|
160 |
Modec International |
4th quarter 2004 |
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Topside fabrication
and installation on new hull |
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Saipem |
2nd quarter 2005 |
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| Rig building |
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Construction
of the 1st unit of a semi-submersible |
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269 |
GlobalSanteFe International |
2nd quarter 2004 |
| |
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Construction
of the 2nd unit of a semi-submersible |
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|
GlobalSantaFe |
4th quarter 2004 |
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2nd unit of jack-up |
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|
GlobalSantaFe |
2nd quarter 2004 |
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1 unit of Baker
Marine Class 375 deep drilling offshore jack-up |
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Sinvest |
1st quarter 2004 |
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| Shipbuilding |
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4 units of 2600
TEU container vessels |
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259 |
Wan Hai Lines |
From 1st quarter 2005 to 2nd quarter
2006 |
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4 units of coastal
vessels |
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|
DML Overseas |
4th quarter 2004 |
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4 units of tugs |
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|
– |
4th quarter 2004 |
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| Topsides and utility modules |
|
P-43 topsides
fabrication, integration and commissioning |
|
160 |
Brown & Root Halliburton |
3rd quarter 2004 |
| |
|
P-50 topsides
fabrication, integration and commissioning |
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|
Petrobras Netherlands |
1st quarter 2005 |
Global
Network of Shipyards
| Shipyard |
% Ownership |
Location |
Capacity/Facilities |
Activities |
| Jurong Shipyard |
100 |
Singapore |
1,100,000 dwt
Berthing quays, workshops, cranes, docks |
Ship repair, shipbuilding, ship conversion, rig
construction and offshore engineering |
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| Sembawang Shipyard |
100 |
Singapore |
775,000 dwt
Berthing quays, workshops, cranes, docks |
Ship repair, ship conversion and refurbishment
and modification of passenger vessels |
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| Jurong SML |
100 |
Singapore |
52,500 dwt
3 slipways |
Repair of small and medium-sized vessels, construction
of mid-sized vessels |
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| PPL Shipyard |
85 |
Singapore |
700 metres water frontage, water depth of 6.5
metres |
Design and construction of offshore drilling rigs |
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| Karimun Sembawang |
100 |
Karimun, Indonesia |
Workshop and engineering facilities |
Ship repair, fabrication works, tank cleaning |
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| Dalian COSCO Marine Engineering |
20 |
Dalian, China |
340,000 dwt
1,582 metre-long berths, workshops and docks |
Ship repair ship conversion and offshore engineering |
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| Mauá Jurong |
35 |
Brazil |
60,000 dwt
Berths, workshops and docks |
Ship repair, topside fabrication, conversion and
construction of floating production and drilling
units |
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