SBM Offshore’s H1 core profit misses estimates, falls below 2022 level

(Reuters) – Dutch oil and gas services company SBM Offshore (SBMO.AS) reported on Thursday half-year earnings before interest, tax, depreciation and amortisation (EBITDA) that missed consensus estimates and fell below the year-earlier level.

It partly attributed the drop to ongoing supply chain challenges and a reduced contribution from the Almirante Tamandaré floating production, storage and offloading (FPSO) vessel project.

Shares of SBM offshore had fallen 7.5% by 1055 GMT, underperforming the Dutch AEX index (.AEX), which rose 0.6%.

The group, which leases and operates or builds and sells FPSO vessels, posted half-year directional EBITDA of $457 million, below the $526 million forecast by a company-compiled consensus and down 9% from a year earlier.

Directional reporting treats all lease contracts as regular operating leases and proportionally combines co-owned investments related to the leases, based on each party’s ownership percentage.

The “turnkey” business, which sells FPSOs to oil and gas companies, swung to a EBITDA loss of $37 million from a $16 million profit in the year earlier period, although that did not include the margin earned from an ownership share in the ongoing construction of five FPSOs.

Group revenue for the six months stood at $1,491 million, in line with consensus but down 15% from the same period in 2022, also hit by a 39% drop in directional turnkey revenue.

SBM Offshore said its pro-forma order book totalled $32.2 billion as of June 2023, up 3.54% year-on-year, mainly driven by signed operations and maintenance enabling agreements, providing extended cash flow visibility to 2050.

It maintained 2023 revenue and EBITDA guidance, with potential adjustments if ExxonMobil Guyana acquires the FPSO Liza Unity at the end of the year.

Kepler Cheuvreux analyst Andre Mulder highlighted the potential positive impact of future FPSO sales which could bring inflows of more than $4 billion over time, and in turn help to reduce net debt and pave the way for share buybacks.

“It is unrealistic that you buy back shares at the peak of debt levels,” Mulder told Reuters, adding that it would be better to wait for the cash inflows as “management has no thoughts on raising equity whatsoever”.

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