SBM Offshore Expects Lower 2021 Earnings as Clients Cut Spending

Maritime Activity Reports, Inc.

February 11, 2021

Illustration: SBM Offshore’s first Fast4Ward® hull at Keppel yard in Singapore. Photo credit Lim Weixiang via SBM Offshore

Illustration: SBM Offshore’s first Fast4Ward® hull at Keppel yard in Singapore. Photo credit Lim Weixiang via SBM Offshore

SBM Offshore forecast that 2021 core earnings will be slightly below market expectations, the multinational oil firm said on Thursday, noting 2020 challenges will spill into 2021 as many of its clients had to cut budgets.

The Dutch company, which supplies floating oil and gas production vessels, forecasts earnings before interest, tax, depreciation, and amortization (EBITDA) of around $900 million in 2021, missing a company-provided consensus for an EBITDA of $926 million.

"COVID-19 affected our clients and the wider energy market and impacted our operations and projects," Bruno Chabas, SBM's chief executive officer said in a statement.

Oil majors such as Total, BP, and Chevron all posted annual losses earlier this year as the coronavirus pandemic dented global oil demand worldwide, with Exxon, one of SBM's clients, slashing spending on new projects by nearly a third in 2020.

However, the firm noted the strong fundamentals of its deepwater projects located in quality resource areas see these ranking favorably in client's capital allocations.

It added its strong cash flow from the long-term backlog leave it well-positioned, despite the continued challenges associated with the pandemic and oil prices.

It, therefore, expects revenues of around $2.6 billion in 2021, above a consensus of $2.05 billion.

The Netherlands-based company posted 2020 underlying revenues of $2.29 billion, for an underlying EBITDA of $944 million, in line with its own forecast.

Revenues from its turnkey division, which builds and sells floating production and storage vessels to oil and gas firms and is sensitive to cuts in capital expenditure by energy companies, fell 22% in 2020.

On the other hand, SBM's lease and operate revenues, which accounts for the bulk of its sales, rose 29%. The division runs and leases the vessels, which are later sold to customers after an initial lease period, and relies on multi-year contracts.

(Reporting by Charles Regnier Editing by Tomasz Janowski)

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