By: musicwhiz Yep, this review was somewhat delayed but the past few weeks have been very busy and in addition, there was also Pac Andes and Boustead's FY 2008 results to contend with. Below is my brief analysis of Swiber's 1Q 2008 financial results; do note that quarterly results are not too significant on their own and it is better to see the overall trend in earnings and margins for any company rather than to focus solely on one quarter alone. Income Statement Review To compare 1Q 2008 with 1Q 2007, it is obvious that revenues and hence net profits have grown tremendously as a result of fleet addition and the presence of a new source of income (i.e. shipbuilding and ship repairs). However, one should also note that gross margins had fallen from 27.5% in 1Q 2007 to 25.9% in 1Q 2008. This can principally be attributed to the growth of Kreuz Shipbuilding and more revenues coming from the ship-building business unit, which traditionally commands lower margins compared to EPCIC. Moving forward, we should see more margin contraction as Swiber has yet to take delivery of its first drilling vessel (thus, it has to rely on third-party vessels which increase costs). The contraction should smoothen out once more of Swiber's fleet comes on-stream, but should still be below current levels as ship repairs/building takes a slightly larger chunk of revenues. That said, the gross margins for deepwater drilling should be very attractive and this unit should help to boost gross margins as the company heads on into FY 2010. Read more...