The world's largest FPSO supplier, SBM Offshore, will shut down its Brasa shipyard in Brazil, where it integrates the modules and hulls of its FPSO units, with a loss of US$20 million. In addition, SBM also saw a $25 million write-down on its Floating Production Unit business.
SBM Offshore said that while Brazil is its main market, with a number of opportunities being actively pursued, the lead time for opportunities for construction activities, combined with uncertainty over the evolution of local content regulations, led to the decision to keep Brasa without activities for at least two years.
Brasa's 65.000 m² yard, established in 2012, is located in Niteroi, Rio de Janeiro, Brazil. Was responsible for building the integration of topsides in the FPSO's of Cidade de Ilhabela, Cidade de Marica and Cidade de Saquarema from SBM.
The company said on Thursday: “SBM Offshore, together with its joint venture partner, has decided to take steps to continue with the Brasa work yard for at least the next two years. This decision will require impairment of the joint venture termination investment (50% interest) to a residual carrying amount of zero, resulting in an impairment of c. $20 million.
No demand for FPU's
In addition to Brazil, SBM Offshore has assumed an impairment charge on its Floating Production Unit business focused on the delivery of semi-submersible platforms and Tensioning Rigs.
SBM stated: “While the company continues to pursue opportunities in the Floating Production Unit (FPU) market, the visibility of customer activity in this segment remains subdued. As a result, goodwill related to the acquisition of Houston-based subsidiaries was fully impaired, resulting in an impairment of c. $25 million.
“The establishment of a global engineering resource pool, announced in February, has facilitated the deployment of Houston-based resources across other product lines, including the FPSO,” SBM said.
In addition to the Brasa and FPU business line, SBM Offshore on Thursday showed optimism about future FPSO demand, also raising its updated 2018 underlying directional EBITDA guidance from “around” to “above” $750m .
SBM Offshore CEO Bruno Chabas said: “The market recovery is accelerating based on industry fundamentals. The investment is needed to secure future production and deepwater projects withclassify favorably in customer project portfolios. SBM Offshore is uniquely positioned to benefit from the current recovery. ”
Directional revenue guidance for the year is maintained at around $1,7 billion, with around $1,3 billion from Lease and Operate and around $400 million from Turnkey. Year-to-date, SBM Offshore generated revenue of USD 1.247 million, flat (-1%) compared to the same period last year.
