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Singapore Daily Bulletin – 06/11/12

SIA To Battle In Various Segments Amid Challenges
Singapore Airlines (SIA) is adopting a “portfolio” approach to its business to ensure a presence in various segments of the business and in multiple markets, chief executive officer Goh Choon Phong outlined this strategy at a media and analyst briefing yesterday. He said the SIA group has a strong presence in the premium end of the business through Singapore Airlines and its regional carrier, SilkAir. Both feed into each other and offer inter-operable support. At the budget end of the spectrum, he said, SIA has its wholly owned, low-cost and long-haul outfit, Scoot, and its 33 percent owned short-haul carrier, Tiger Airways. “With these four pieces, as a group, SIA is able to participate in any segment of the airline business,” he said. “At different points, different segments grow at different rates. But all four propositions are positioned distinctively so that there is no branding confusion or cannibalisation.”

Significance: To overcome an evident gloomy airline industry outlook, SIA has decisively taken numerous steps to position itself for future growth in various business segments through recently placed purchases for a large number of aircrafts, taking up a 10 percent equity stake in Virgin Australia and signing of a Joint Venture with Scandinavian Airlines.

Keppel O&M Clinched Contracts Worth $160m
Keppel Offshore and Marine (Keppel O&M), a subsidiary of conglomerate Keppel Corp, said that its overseas yards in the Philippines and the Netherlands have won contracts totalling $160 million. Keppel Subic Shipyard will build a depletion compression platform (DCP) for Shell Philippines Exploration to support natural gas recovery in the Malampaya gas field near Palawan Island. The Subic yard is beefing up its capabilities with a 1,500 tonne gantry crane, other cranes and worksite facilities like workshops to accommodate more work. In the Netherlands, Keppel Verolme will embark on the drydocking survey of a deepwater construction vessel, Balder, from its repeat customer Heerema Marine Contractors. The yard had previously worked on the Balder in 2001 when it converted it. Keppel Verolme will paint the Balder’s hull, bracings and cranes, as well as maintain and repair its tanks and piping. The work is expected to wrap up in 1Q13.

Significance: This latest contract wins brings Keppel O&M’s orderbook tally this year to just under $9 billion. Its managing director (marine) Michael Chia commented that the firm is positioning its yard with stronger capabilities to offer better services to take on more onshore and offshore fabrication projects and conversion work for floating production storage and offloading vessels.

Sembcorp Marine 3Q12 Earnings Dived 48% To $115.5m
Timing of revenue recognition on its rig-building and ship-repair projects once again led Sembcorp Marine (SembMarine) to report sharply lower net profits in 3Q12 of $115.5 million, down 48 percent from $222.5 million from the period a year ago. Quarterly revenue dived 32 percent to $892.4 million from $1.3 billion in 3Q11, which was when SembMarine resumed recognising revenue on the delivery of a semi-submersible unit Songa Eclipse. SembMarine said its rig-building arm took in 52 percent less revenue of $428 million in 3Q12 with a jack-up rig as compared to 3Q11’s $885 million when it completed and delivered the Songa Eclipse. Ship-repair turnover also fell 13 percent to $153 million from $175 million because of the timing of the projects. Only its conversion and offshore sector registered an increase in 3Q12. Turnover at the business segment rose 29 percent to $300 million from $232 million as the FSO Banyu Urip entered revenue recognition phase.

Significance: Looking to add to its record orderbook of $12.1 billion, SembMarine is buoyant on the offshore exploration and production area as oil companies make discoveries in frontier areas and in deepwater basins in the America and Africa regions. Additionally, it sees opportunities for “repair and life extension work for LNG carriers as well as repair and upgrading work for cruise ships and offshore vessels.”