SBM Offshore Expects Revenue to Fall for Third Straight Year

File photo: SBM Offshore
File photo: SBM Offshore

ReutersFeb 8 (Reuters) – SBM Offshore expects 2017 revenue to fall 15 percent as the world’s top oil production ship leasing company said it sees early signs of stabilisation in the offshore industry, but warned that the recovery was slow.

“2017 is not going to be a good year in terms of order intake … we’re still in a phase of slow recovery in the industry,” Chief Executive Bruno Chabas said, while adding that he expected more orders in 2018.

SBM, which leases, operates and sells floating production, storage and offloading (FPSO) vessels, expects 2017 non-IFRS revenue of about $1.7 billion, a 15 percent decline compared to last year, and the third straight annual decline.

SBM’s 2016 full-year core profit (EBITDA) jumped 67 percent to $772 million, beating analysts’ estimates as strong growth in Lease & Operate offset weakness at its turnkey business.

The company said the overall decline in 2017 outlook was due to its transition from turnkey to lease and operate, with an improved outlook for the latter but a lower order backlog in turnkey due to market conditions.

“The Lease & Operate segment got boosted as three units that were under construction for two to three years have finally been delivered in 2016 and as such started their long lease contracts,” Kepler Cheuvreux analyst Andre Mulder said.

The Dutch-based company also proposed a cash dividend of $0.23 per share, an increase of 10 percent year-on-year, exceeding analysts’ expectations.

The company has also been struggling to put a Brazilian corruption scandal behind it. Brazilian prosecutors rejected a $328.2 million leniency deal that would have avoided prosecution for corruption related to contracts with state-led oil company Petrobras.

The company did not give an update on the settlement on Wednesday.

If the company manages to settle the case, as recent reports have indicated, SBM would be well placed to win a tender for the Libra oilfield offshore Brazil, KBC Securities analyst Tom Simonts said. (Reporting by Jochen Elegeert, editing by David Evans)

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