The Past Five Years for Seatrium Investors: A Path to Profitability

As an investor in Seatrium (SGX:5E2), the past five years may not have been profitable, but there's a silver lining to this cloud. The company has been through a significant transformation, and the future looks promising. Let's delve into the key factors that have shaped Seatrium's journey and explore the strategic changes that position the company for profitability.



Seatrium's unprofitable past five years can be attributed to several factors, including non-cash write-downs, provisions for onerous contracts, legal claims, and merger expenses, as well as the impact of low oil prices and the COVID-19 pandemic on the offshore & marine industry. However, it's essential to recognize that these challenges have also presented opportunities for the company to refocus and emerge stronger.

One of the most significant strategic changes Seatrium has implemented is the successful completion of its integration and strategic review. This has allowed the company to focus on improving financial performance in FY24 through quality, safety, and timely project deliveries. This focus has led to strong order wins, including two 2-gigawatt HVDC Offshore Converter Platforms from TenneT and Sparta Floating Production Unit (FPU) from Shell, as well as a Favoured Customer Contract (FCC) with TMS Cardiff Gas for the refit of 17 liquefied natural gas (LNG) carriers in Singapore. These wins have contributed to a net order book of S$16.2 billion as at 31 December 2023, with ~39% of the orders being for renewables and cleaner/green solutions. Management is positive on the outlook for the offshore & marine (O&M) industry, indicating that these strategic changes are likely to have a positive impact on the company's profitability.

Seatrium's financial performance has evolved significantly over the past five years, with notable improvements in revenue and underlying EBITDA. Revenue grew from S$1.2 billion in 2018 to S$7.29 billion in 2023, representing a 524% increase. Underlying EBITDA grew from S$147 million in 2018 to S$628 million in 2023, a 331% increase. While the company has reported net losses in recent years, primarily due to non-cash write-downs and provisions, the significant growth in revenue and underlying EBITDA suggests that Seatrium is well-positioned for profitability in the future.

As an investor, it's crucial to stay informed about the company's strategic changes and financial performance. By doing so, you can make well-informed decisions and capitalize on the opportunities that arise. Seatrium's transformation over the past five years has been challenging, but the company's focus on improving financial performance and its strong order book indicate a path to profitability. Keep an eye on the company's progress, and consider the potential benefits of long-term investing in Seatrium.