FY10 net profit slightly below expectations. Swiber Holdings (Swiber) reported a 56.7% YoY rise in revenue to US$155.9m and turned in a net profit of US$8.5m in 4Q10 (vs. net loss of US$6.5m in 4Q09). Full year revenue of US$469.7m was in line with expectations but net profit of US$37.3m was slightly below, forming 93% of our full year estimate. Stripping out one-off items such as gains on disposal of assets and fair value losses on financial liabilities, we estimate core net profit to be about US$30m in FY10, compared to our forecast of US$34.6m. Meanwhile, it is encouraging to see healthy gross profit margins of 22.4% in 4Q10, compared to only 0.2% in 4Q09; we note that gross profit margin has stayed above 21% for all quarters in this year.
Higher costs with business expansion. Administrative expenses almost doubled to US$18.4m in 4Q10 compared to US$9.6m in 4Q09, and this was higher than expected. We understand that Swiber increased its business development budget, staff related costs and office and administrative budget with the increase in business activities - the number of employees grew from 960 as at Dec 09 to 1250 as at Dec 10. Going forward, we are not expecting significant increases in administrative expenses. The effective tax rate of 37% in 4Q10 was also higher than the average of 7% in 9M10 with higher taxes that were provided and paid for in relation to projects in Myanmar and India.
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