Good morning, everyone. Thank you for joining us at Seatrium's First Half 2026 Results Briefing. My name is Amelia, and I take care of investor relations for Seatrium. This morning, we have with us our CEO, Mr. Chris Ong, our CFO, Dr. Stephen Lu. Chris and Stephen will bring us through a short presentation before we open the floor to questions. Chris, please.
Thank you, Amelia. Good morning, and thank you for joining us today for Seatrium's First Half 2026 Results Briefing. Today's results center on three key themes. First, despite macroeconomic uncertainties, we continue to deliver strong progress. While revenue maintain healthy momentum, our primary focus is driving margin efficiencies. Our cost optimization and divestments are delivering real, sustainable benefits. Second, we remain well-positioned to capture opportunities from a global pipeline of over SGD 32 billion. Although the market was relatively quiet in the first half, we are actively engaged across all major energy markets and expect FID momentum to accelerate in the coming quarters. Our net order book remains healthy at SGD 13.3 billion, providing clear near-term earning visibility with a higher-quality project mix. Third, we're shifting from recovery to value creation. This means growing earnings, generating cash, and building resilience by scaling our series build and adjacent services business.
On the financial headline, revenue rose 5% to SGD 5.6 billion, in line with FY 2028 steady-state target range of SGD 10 billion-SGD 12 billion. We continue to be focused on driving margin improvements through strong execution, quality projects, and reducing overheads. Year-on-year gross profit margin rose to 8.6% versus 7.4% last year. This translated to a 54% year-on-year improvement in net profit to SGD 212 million, even if you exclude the one-off divestment gains. Including these divestment gains, we reported 158% growth in net profit to SGD 373 million. That 54% is the number to anchor on. It reflects genuine improvement in operating performance, expanding gross margins, and a leaner overhead structure, and a project mix that continues to shift in our favor. The direction is clear, and it is consistent with where we need to be by 2028.
Our net order book stands at SGD 13.3 Billion, with 24 projects deliveries through to 2033, providing clear earning visibility. The quality of our order book is also improving, with over 95% consisting of series build projects that raises execution certainty. With the completion of three projects in the first half, the proportion of lower-margin legacy non-FPSO projects has declined to about 1% of the net order book, less than SGD 140 million in value. Our execution remains focused and on schedule. We delivered state-of-the-art dredger to Manson and a WTIV to Maersk. We also completed a complex FPSO integration for Exxon and MODEC. The Revolution Wind offshore substation has completed offshore commissioning and will be delivered to Ørsted in the coming weeks. Looking ahead, key projects like P-80, P-82 , and Shell Sparta remain on track for sail away in second half 2026.
New order wins to date are just over SGD 100 million, including FSRU conversion for Karpowership LNGT Karadeniz, and the recent takeover of an FPSO life extension project to prepare the asset for redeployment in South Atlantic, as we finalize our scope with the client. Global pipeline opportunities remain robust at SGD 32 billion over the next 24 months, with supportive market dynamics amidst strengthened energy security and diversification themes. To highlight the key pipeline changes since FY 2025, the Petrobras SEAP projects were removed from our pipeline in 1Q 2026, reducing opportunities in South America from SGD 12 billion to SGD 8 billion. We continue to engage with SBM on local content opportunities. In South America, we are mainly pursuing full-scope FPSO EPCC for upcoming BOT tenders with Petrobras, alongside Guyana integration and module fabrication opportunities.
North America has increased from SGD 1 billion to SGD 2 billion as we are pursuing growing FLNG opportunities in Africa worth about SGD 7 billion. Fixed platform opportunities in the Middle East remain intact. Alongside SGD 1 billion in opportunities in Asia, that totals about SGD 21 billion in oil and gas opportunities that we're chasing over the next 24 months.
We are also tracking SGD 9 billion in offshore wind pipeline, predominantly HVDC and HVAC platform work in Europe and Asia Pacific. This includes TenneT's major infrastructure program amongst opportunities with other TSOs and operators. Conversions represent approximately SGD 2 billion, largely FSRU and powerships, mainly through our Karpowership partnership. This breadth across distinct market cycles is what gives us resilience. Our commercial teams are busy. While we cannot control FID timing, our activity level reflects the pipeline is real and moving, and we are confident in our competitive positioning.
In short, it's a matter of timing, not demand. Our FPSO business is where we see the most visible near-term opportunity. We are among a selected group of yards capable of delivering large, complex new build at full EPCC scope, with contracts in the range of SGD 4 billion-SGD 5 billion. With our globally leading track record and three leading yards in Brazil, we are well-equipped to support customers in meeting local content requirements. This gives us a strong competitive advantage as we pursue upcoming FPSO tenders in Brazil, particularly full EPCC projects similar in scope, margins, and payment terms to the six P-series FPSO currently on our order book. Beyond FPSO, we are seeing a growing demand for FLNG and FSRU deployment, driven by LNG supply tightness, energy security, and the push for supply diversification. These are faster to market and more cost-effective than conventional infrastructure.
We have delivered the world only two operational LNGC to FLNG conversions. We are also developing FLNGX, our proprietary next-generation FLNG design with AIP achieved, allowing us to pursue new build FLNG opportunities that may arise. We have executed over 90% of global FSRU and FSU conversions. In 1H 2026, we secure a new FSRU conversion contract with Karpowership, and this is not a one-off. The pipeline for gas conversions is real. It is growing, and we intend to take a leading share of it. On offshore wind, our position spans the full sea-to-grid value chain. That end-to-end breadth is not common in this industry. While offshore wind remains a long cycle market, the project's timings have temporarily slowed. The underlying demand outlook remains strong. Momentum is expected to return in 2027, supported by grid investment in Europe and an expanding project pipeline across Asia Pacific.
As market moves into deeper waters, floating wind will become increasingly dominant. We are preparing for that opportunity through our proprietary FWSS foundation design and a U.K. site that gives us early access to the market and a platform to validate our technology and supply chain. Separate from our pipeline, our repairs and upgrade business provides a resilient earning base, balancing out our project-based revenues. The market backdrop remains constructive. We remain differentiated through our scalable global execution platform with supportive ecosystem and globally leading proven track record. While our staple of FCC contracts entrenches us deeply with high-quality customers, we have been refocusing our repairs and upgrade business for growth, pursuing higher-value segments where we have a clear competitive edge. Maintaining a balanced mix of these stable base customers with higher growth niche segments, we expect higher volumes in second half 2026 that will drive stronger segment performance.
I shall now hand over to Stephen to take you through the financial review. Stephen, please.
Thank you, Chris. In first half 2026, we continue to make good progress on margin expansion and cost control. First, our central financial priority is to strengthen margins for resilience. We increase our profitability in first half 2026 through consistent gross margin expansion and a robust year-on-year increase in NPAT, excluding divestment gains. Second, structural cost optimization is bearing fruit. We have materialized initial cost savings from our divestments, and we expect to see the full annualized run rate benefits from May 2026. Digitalization, AI, and machine learning continue to drive further operational efficiencies. Third, on the capital management front, we have strengthened the balance sheet and enhanced our financial flexibility to support long-term returns. Revenue for first half 2026 grew 4.6% to SGD 5.6 billion, underpinned by steady execution of the group's solid order book. This maintains the annualized run rate consistent with our FY 2028 target range.
Revenue for the oil and gas segment grew 15% to SGD 4.2 billion, driven by advancing project progress on FPSOs P-84, P-85, and the two FPUs Kaskida and Tiber. These large, complex projects are now entering their most active phase, as reflected in the higher revenue contributions. Offshore wind segment was lower by 21%, primarily due to the declining contribution from legacy projects. Repair and upgrade segment was broadly flat despite a decline in the number of vessels completed. This reflects our deliberate refocus towards higher value projects. Finally, the other segment declined 17%, reflecting lower contributions from specialized shipbuilding. Reduced MRO activity due to the ongoing Middle East tensions. Our gross margins expanded by 120 basis points to 8.6%, up from 7.4% in first half 2025. Key margin drivers remain consistent. A growing portion of higher margin projects improve operating leverage year-on-year and continued cost discipline.
The combination is producing structural margin improvement, and these improvements were partially offset by a close-out provision relating to the Maersk WTIV, which we delivered in February 2026. Other operating income increased mainly due to the one-time pre-tax divestment gain of SGD 172 million from the asset sales announced earlier, the last of which was completed in April 2026. We have earlier communicated SGD 200 million in additional non-core assets earmarked for sale, and we are pleased to report that we have sold an accommodation vessel, Aquarius Brasil, a few days ago to Grand Energia, a leading vessel operator in Brazil, for over SGD 80 million. The non-core vessel is about 30 years old, and we capitalized on an attractive opportunity to monetize the vessel while it was still on charter with Petrobras, securing a sale above book value.
This transaction removes future recontracting risk, provides greater certainty over the realization of the vessel's remaining economic value, and is expected to close later this year.
Next, our G&A costs remain stable at around 3% of revenue, and overall, our net profit grew 158% to SGD 373 million. Excluding divestment gains, NPAT grew 54% to SGD 212 million. EBITDA, excluding divestments, rose 20% to SGD 479 million. We achieved positive cash flow, which is a strong indicator of both the quality of our earnings and the overall health of our project portfolio. OCF, excluding a one-time legacy payment, was SGD 114 million. The one-off item is the Carwash final settlement payment of SGD 73 million that we made to the Singapore authorities. Including this payment, reported OCF was SGD 41 million. Investing cash flow contributed SGD 123 million. CapEx was SGD 52 million and was deployed mainly for project needs and safety spend.
Our portfolio optimization program unlocked SGD 167 million in cash from asset divestments. Ultimately, our free cash flow was SGD 237 million excluding the Carwash settlement. This is a substantial turnaround from the negative SGD 5 million reported in the prior period. This trajectory is driven by disciplined project cash management, progressive milestone payment structures, and proceeds from our divestment program. Now quickly turning to the capital structure and balance sheet. I think the key development in the first half was the launch of our SGD 3 billion Multicurrency Debt Issuance Programme in April 2026, which we followed with an inaugural SGD 400 million issuance of our senior unsecured note due in 2031, priced at 2.95%. The issuance received strong institutional demand, a clear signal of market confidence in Seatrium's credit profile. Liquidity remains strong at SGD 3.4 billion in cash and undrawn committed facilities.
Net leverage has improved to 0.5x , and net gearing maintained at 0.1x . Overall, we have a robust, flexible balance sheet with ample headroom to fund any working capital and future growth opportunities. With that, I shall pass the time back to Chris.
Thank you, Stephen. We remain firmly on track to achieve our 2028 steady-state targets. First half 2026 revenue of SGD 5.6 billion tracks comfortably towards our SGD 10 billion-SGD 12 billion annualized target. EBITDA momentum is building, and ROE of 6.1% annualized is moving towards our 8% and above target. We are also delivering on our commitment to shareholders. Our 100 million share buyback program is near completion, with 90 million already repurchased, a clear signal of our confidence in the business. Upon completion, we intend to launch a new share buyback program to enhance shareholder value.
Let me close by coming back to the strategy we outlined at our 2024 Investor Day. We said then that the world's energy future would be shaped by the need to balance these three priorities: security, affordability, and sustainability. Two years on, that energy trilemma remains firmly in place and continues to drive investment decisions.
Seatrium is uniquely positioned to address these pressing needs. Our breadth of solution offers agility that required to meet the dynamic pace the market is demanding. Our track record is the evidence of our ability to deliver certainty. We believe we are strongly positioned to capitalize on market opportunities. We also said in 2024 that we would be focused on margins. Today, despite significant macroeconomic headwinds, we have delivered a visible progress and established a clear pathway for further margin improvement. While new order wins remain important, our focus is not growth at all costs. For us, growth means winning the right work, executing strongly, and translating it into sustainable financial performance and resilience. The progress we have achieved reinforces our confidence that Seatrium is on the right path.
We expect to deliver a stronger full year 2026 performance, with the key margin drivers intact and gains unlocked from the divestment. Our strategic priorities never changed. We have remained focused, delivered tangible results, and strengthened our competitive position. We are confident that Seatrium is well-positioned to drive sustainable, tangible value for all shareholders and stakeholders. Thank you.
Thank you, Chris. We'll now open the floor to questions. For those of you in the room with us, please raise your hand to ask a question. Terence, the mic is on.
Thank you. My name is Terence, I am from JP Morgan. Congratulations, Chris and Stephen, on the very strong set of results and the margin improvement. If I may ask my first question, historically, Seatrium has performed strongly under Petrobras EPC-led tendering framework, winning 90% of Petrobras EPC contracts from 2021 to 2024. With Petrobras increasingly adopting BOT structures that require operating capabilities, what are the key changes in the competitive landscape from Seatrium's perspective? How is Seatrium positioning itself under this model, and what factors will determine the win rate in future Petrobras contracts? Thank you.
Thanks. Good that we met. First things first, I think the competitive landscape, if you talk about FPSO competition, it has always been there. Your statement about us winning that way seems to indicate that it is almost a walk in the park, and I can assure you it wasn't. If you remember, before the EPC slew of contracts, we were actually in different form. Contracts came in different form. It is a hybrid between engineering, procurement . The customers have track record of changing the formula, how they want to go to market. It is a mix rather than a change, because there will still be EPC or BOT contracts that come. I guess the main question is that how do we play in the BOT world? BOT world that we are going into the bidding stage, largely, there is no difference.
It depends on who fronts the contract. For BOT, it is a true train EPC then followed by O&M, right?
Technically, we are in play for the EPC contracts, and technically, I would rather see that based on your comment just now, with the number of EPC contracts that we have in place, we are sail away one that has shown that it can perform straight to the field. That puts us in a good position in terms of technical, and also we have said that our ability to work on how we basically build those assets. Very complex. I think the team now has a good track record. Even if we do not consider the time before the EPC contracts, just focusing just on the EPC contracts, I think P-78 was very important for us. Well, there were a lot of detractors along the way, but the team did well, managed to sail away directly to the field and produce.
I think that is something in the market that is seldom achieved, right? We did not stop at our yard in Brazil, and it went straight to field, and I think now it's tracking along very well. P-80 and P-82 will sail away. We think that it will mimic, if not improve, the performance of what we have right now.
Thank you so much, Chris. We also understand that Seatrium is pursuing subcontracting opportunities with SBM under the SEAP contracts. Also Seatrium is participating in the full-scope upcoming Petrobras FPSO tenders as a direct bidder or consortium partner. How should we think about the potential overlap between direct tender participation and subcontracting opportunities?
All these opportunities have always been around. If you take a look at different span of scope in an FPSO contract, Guyana with Exxon is very clear. Those have SBM and MODEC in play. We also have contracts that are lease and operate type of contracts all the while. Our local yards have played the local content very well. There's a different mix. If you take a look, how will you think about the overlap? It is really driven by the project requirement. When you construct modules and whether you do the full integration, those are time and space. I can't really guide how do you look at what is the difference. We still have the Jaguar. We sail away of one of the Exxon integration-only type of projects. We still have Jaguar in the yard.
We are pursuing all these prospects, whether they are EPC, whether they are integration, whether they are just module fabrication. All hands on deck. The team are very busy.
Thank you so much.
Thank you. Thank you for the question. Good to see you.
Thanks, Terence. Just now we had a hand from Luis.
Hi, good morning, and thanks for hosting. Congrats on the results. This is Luis from Citi. Just had three questions initially. The first one is regarding the overhead cost savings. Could you disclose how much of those, of the SGD 50 million you had booked in the first half, and therefore what's coming in the second half? The second question relates more towards your order book. We saw from slide 25, where you have the percentages of completion, that you're even now working quite significantly on contracts that are due 2028 and onwards. Is it possible that you'll finish earlier? In that case, do you also get paid ahead? Would be the question. Third question is on the rolling order book pipeline that you've upgraded to SGD 32 billion. Chris, you mentioned earlier part of it is SGD 1 billion more in the U.S.
I didn't catch the rest of the SGD 3 billion, where is it coming from, essentially?
Do you want to take the first one?
I can take the first one. The OpEx savings, as you recall, we said the divestments was about SGD 50 million on a run-rate basis. In the first half, we completed all the transactions in April. In the first half, we recognized approximately SGD 10 million on a run-rate basis. By second half, the SGD 50 million should come in. Hope that answered your question.
Yeah. Luis, I'll take the order book, the elephant in the room. I think the question is in twofold, right? Whether we can accelerate so that we can get paid earlier. You speak like my customer. Everybody love to accelerate. We have to balance, because at the end of the day, we do have quite a lot of inquiries also. Technically, it's the planning of time and space. That is the beauty and the expertise of Seatrium. Now we are fully integrated. Manpower, in a way, is fungible. Technically, when work fronts, because it's not just about manpower or whether you can accelerate, it's also work front. If certain work fronts are not ready, we are not reckless in order to push. Technically, I would rather see that most of the series build projects are progressing better and better after each one.
P-84, P-85, that is progressing very well. The key is to make sure that we are safe, and of course, if there are opportunities to accelerate, definitely. Again, that's the beauty of the contracts that we have. Milestone driven. When we hit the milestone, we'll be paid. Most of the customers have honored and are very happy to pay us because means that the projects is progressing along fine. Beyond inquiries, we also have to balance between segments, right? R&U is also a little bit more dynamic, it's a balance between prospects and ongoing, that we are able to answer and service most of our customers at one go. You mentioned about U.S. U.S., without a doubt, with us already operating and delivering Sparta, progressing along fine on the BP FPUs. That market is a very important market for us.
SGD 1 billion, I think no doubt those would be mainly on LNG prospects. We are excited about that and are pushing for that. We'll let you know when the project has some landing.
Thanks, Chris. Just a follow-up on that, the additional SGD 3 billion, it's coming from which other countries? Because first quarter, you had SGD 28 billion targets, now it's SGD 32 billion. SGD 1 billion came from the U.S., the balance is Brazil, or?
I wouldn't segmentize that way, suffice to say, compared to the last, I believe you guys asked a lot about, "Hey, it reduced," but now it went back again. It's a coincidence it became SGD 32 billion again. We did not do anything on that. The increase mainly will be around LNG prospects, as we mentioned just now. I think that market is proving to be quite a big inquiry work that we are doing right now. FSRU, like what we mentioned, we are the world leader in FSRU conversion. We recognize that. We started the very first one, to date, we are market leader. In a very short time, we are looking at no less than six to nine FSRU tenders right now. Ranging from integration or full EPC for FSRU, also for FLNG conversion. We are actively looking at that.
At the same time, as what we mentioned, the team is not static. Our technology group is developing FLNG new build. I think that part of the market is something that is sapping up a lot of our energy around. Hopefully there'll be good news coming.
Thank you.
Thanks, Luis. Next question, Ho Pei Hwa.
I'm Ho Pei Hwa from DBS. Congrats on the good results. I have two question First is maybe a continuation from what Terence asked. Going to the BOT model going forward, we are partner with operator as well. There are maybe some 10 pre-qualified operator. If you go into this mode, how would that change our relationship with all these operator going forward? This is the first question. Second question is on order win. I think all of us has been asking, since first half is relatively slow, so I wonder if Stephen could give us a bit more colors or confidence as to what are maybe some major projects that we could expect, FID in the second half. Thank you.
I will talk about the BOT. I think just to crystallize the understanding of a BOT tender. BOT tender is largely different from how some of the operators really tender out the project in pieces. The BOT tenders that we are involved with a front-running operator usually will involve us. The next one, of course, it involves us taking the EPC part of the whole thing. Again, proven track record, again, we understand what is the requirement, and that's a huge part on building things in Brazil and for Brazil. The partnership is around. BOT tender is slightly different from how you should think about in an EPC contract, because EPC, you just give a technical specification, you cost against it, and you talk about margin. The BOT, the art is about trusted partners and also importantly, how you structure the contract.
If you go in and you start having overlapping interests and also margin, then you're not pricing to win. We are going into BOT with the mindset of pricing to win with our partners. It is quite elaborate. The risk and reward is quite slightly different, but mainly, you should think of us wrapping the EPC portion because we are already proven. There are knowledge within the organization. There's already ability on the One Seatrium execution, how to get that done. BOT is, to me, if you take a look at where we add value, would be the full EPC scope. All right? In terms of order win, there are quite a bit of hints inside what we said. I can't control FID timing for the contracts that we are chasing.
I think I maintained that since, I believe you all asked the same question in 2023, 2024. Same, you were chasing me to say that, "Hey, how come?" I would love to give good news like a REIT every time it's about distribution and contract wins. The key thing is that the team is fully engaged. If you take a look, actually right now, I would say that our tender team is involved in projects, and it's almost their peak. They are really going out there and try to win the good quality contracts. What are upcoming? There are, of course, Albacora is well-known in the market. That one results will be in second half. That's not just the only one. There are a few FSRU conversions.
I've already said that I think that we are in a period of time where we suddenly see quite a number of inquiries around there. Of course, HVDC and HVAC is a built up, not forgetting that we won a HVDC contract in December. That's only quite recent, and it's a very competitive tender. Very proud of the team when they won it. Depending on how and when the tender is going to come, the team is also locked in with the customers. There are a few HVACs that we are chasing. I think broadly across, you think oil and gas, there is also Guyana that's coming. Right? Guyana, I think ExxonMobil has been in the market. That's public domain knowledge.
If you take a look at it, I can go on and on, but those are the breadth across all our segments that we are locked in with the customers.
Chris, can I just one point, Ho Pei Hwa . On the BOT, the commercial terms are similar to what you've seen with our other projects around margins and milestone payments. The structure is different, but the end exposure for us is actually the same.
Yeah, that's a good point. When I say the EPC contract, if it's a EPC contract, of course, we are direct with Petrobras, and we have the EPC contracts. If you take a look at a BOT, it depends on the structure, right? Of course, the operator partner would be the one that's going to front it, and we will have a structure. Largely what I'm trying to say is that the specification, the payment terms, the risk profile, localized in the EPC scope itself is largely the same.
Thanks, Ho Pei Hwa. Next question. Meg.
Hi, this is Meg from CGS. Thank you for the opportunity. I noticed in your pipeline, compared to the full year, in the Middle East and Africa, you've kind of split it out this time with a bit more clarity on Africa versus Middle East. Can we understand how that has changed from early in the year, pre-war? Was it more on the Middle East side, how that pipeline has changed, and any inquiries that you're seeing following the conflict there? Secondly, on P-80 and P-82, understand that they're scheduled for delivery in 2027, but would they be sailing away in 2026 before that? Thank you.
Africa, Middle East, I think there was some feedback that, what is the color around, because I believe at that point of time, all our analyst friends trying to peek into whether the Middle East conflict affects the pipeline. That's why we are very specific in splitting that up. The other portion is also because of how the market is moving. We mentioned that the market security, quick to market type of concept around that, we do see an increase in Africa prospects. Whether it is oil or gas, I think that there are quite a lot of customers that are actually looking at that area. We thought we'd give the granularity for you to make sure that you understand where we are looking for. P-80 and P-82. For EPC contracts, it doesn't stop when we sail away.
Just like P-78, it sailed away, went straight to field. The team is on the FPSO, gunning for first oil, then you inject gas, or you flare, and then after that, you export cargo. All right, even P-78 sailed away, it is now, I believe that we are past all the. We are waiting to export cargo. I think capacity-wise, it's already more or less proven. It's the same for P-80 and P-82. They will sail away this year, second half. That's confirmed. Look forward to our LinkedIn post with nice pictures for the ceremony. That's why it is projected to be delivered next year, because there are still on-field works that needs to be done. Saying that, we share with all of you now, Seatrium is very largely global. All my dear colleagues are largely One Seatrium.
We have local Singapore and Brazilian colleagues sailing with the FPSO, making sure that they take care of it and they'll come online nicely next year.
Thanks, Meg. We have a question online from The Straits Times. Shuyen from The Straits Times. How has Seatrium been affected by geopolitical issues this year? With the energy crisis due to the volatility of oil prices, do you see an increased shift towards renewable energy that could propel Seatrium's future projects?
Thanks, Shuyen. Let me try to internalize the question, because there's a lot of moving dynamics that you have listed in your question. Geopolitical for Middle East first. I think it affects everybody. The first order impact, of course, is cost, right? I think the price of diesel and all this for operation definitely hits not only us, it hits every industry. Again, I hope you all appreciate the work that's done by the team. Despite all this, I think our discipline around margin, around execution, still brought in a very credible sets of results. In terms of prospects, that is why I ended the opening speech by saying, look, at the end of the day, it is not largely in terms of prospect, it's not largely dependent on oil and gas, oil prices. There are different dynamics. I focus a lot around oil prices.
I didn't focus on oil prices. I rather, I take a look at what are the security that different countries in different region they are looking at. If we broadly take a look at all our prospects, it actually paint a picture. When we say that the type of projects we are looking at, Africa seems to add a lot color today because there is prospects that our customers are looking that they are able to bring it to FID potentials, but we have to wait because we are further down the food chain. We give them solutions around how to build the asset, but they have larger consideration. Of course, South America is one of the big oil producer. Comes to U.S., which is a very gas-centric type of market. That doesn't mean renewables doesn't play a part.
If you take a look at Europe, is it a transition or a security question? I think that is a very clear-cut answer. I think it's both. Asia is about LNG. It's also their offshore wind prospect they're working on. I believe that, I think it's a long way of answering a very complex question because there are operating risks, of course, that are well managed, but the prospects, even from the Middle East, they are still moving. The key thing is that which are the ones that we will place our bet to actually chase to give us a good margin and a good chance of delivering it. Those are the things that we are very focused on. Of course, customers. Trust in customers with us is quite evident. Many of them are all repeat customers.
They know where to go and who to call. That is one of the most important. Customer investment, the prospects remains intact, especially for deep water. Again, I can go on and on. It becomes a strategy session. Remember, deep water assets, as we mentioned much earlier in our strategy, when it comes to geopolitics and bankability of all these deep water assets, even in challenging jurisdiction like Africa, is a very attractive formula because it's deep away from land and you move away from the geopolitics a lot. The ambition to actually extract is very clear and is there. The type of asset depends on the field, but I think the bet is really on deep water oil and gas products.
Thanks, Chris. We have a next question from Sharanya.
Thank you so much for the presentation. I have a few questions. First, you also mentioned that there's a bit of impact on the MRO segment, if I didn't hear wrongly from the floor, could you elaborate a bit more about how you see the situation evolving going forward given the continued uncertainty? My second question is on the offshore wind segment. You mentioned that there's going to be momentum in 2027, and you mentioned Europe and APAC. I would like to ask for APAC, or even globally, where do you see new growth markets beyond the traditional places like Europe and Taiwan? Are there opportunities in markets like Philippines where there's more talk on offshore wind? My third question is on, can I just double-check, you mentioned that you're looking at six to nine FSRU tenders, is that correct?
Could you talk a bit more about which markets are particularly of interest, and what are the macro trends that are driving FSRU demand, in light of the very volatile situation around global LNG right now? Thank you.
Wow. This is turning into a strategy session, but okay. Let me try to address this. MRO in Middle East, I think disruption. Basically, most of our MRO business is in Middle East. All right? We don't think that there's a disruption in market. I would rather say that there is a little bit of tension in the pace because of the time, but we fully expect that to come online because the assets are out there are still drilling. Tenders are still coming. At some stage they will have to do something. I think basically what is limiting it is about human traffic, flights, and all the challenges. Our MRO in Middle East, we have very good local colleagues down there still holding the fort. Our thoughts are with them, for them to stay safe. Now, offshore wind. Wow.
You mentioned please don't talk about Europe because it is already a very mature market. Thank you very much. Yes, it is a very good market for us. By no means it is really mature. I think there's still potential to go after. APAC, of course, the main place will be Taiwan. All right? There are quite a number of countries that were mentioned with new prospects like Philippines and all this. I think, Japan, Korea, it depends on how open that market is. There are prospects. It takes time. Usually where we track are the developers, that we know very well, like people like Ørsted, people like the Taiwanese market developers.
Where it will happen is that, definitely Seatrium with the track record that we had delivered in Taiwan, that gives us a very good position to actually repeat that design and in a more certain way. Prospects are there, but I think that is premature at this present moment because, if you take a look at the news, I think tenders are just barely beginning and even in Philippines, yes, I think that we will be approached, one way or the other. You mentioned about FSRU, macro trends and where they are. Honestly, I can't list down all the places, but suffice to say, if you look at the LNG market, we believe that the war itself has created the security issue. The flow of fluids around the world will be changing. Changing in the sense that the security question comes to the front for all nation.
How do I secure my feedstock, and how do I power my homes? That has led to the question on infrastructure investment. Infrastructure investment, then the question will come, which would be the fastest to market and which one would be the most certain one to go? We have engineered that solution of FSRU, first in the world. We convert, and then it went to market. It has caught on. It's precisely with this concept where if you need an infrastructure that allows you to receive LNG into your grid, that would be one of the fastest way because the FSRU is converted in a controlled environment in a yard. You develop your key and the ability to intake, and when the FSRU turns up, you are able to receive LNG feedstock from the LNG sea. It is dotted all over the world. The prospects are worldwide.
The key thing is that both FLNG and FSRU prospects probably will turn up hand in hand. It is a lot more on the trading route, for this one, and also a security question. Operators would b e the better group to answer where are the prospects. We are seeing that there are nations that are looking at how to be LNG ready. All right. Thank you.
Thank you. Sorry, just a small clarification on the six to nine tenders you mentioned. Is it for just FSRUs or-
Yeah
just-- Are you able to share which markets specifically, or?
Which market? Yeah, I can't.
Okay.
Like I said, it's suffice to say that it is dotted all over the world. Yeah. They just want the infrastructure to be LNG ready. It's a regas. When you transport, once you have a FSRU at your quayside in your country, that will allow you to be LNG ready. All right? That is a good piece of asset to have when you think about energy security question.
Got it. Thank you.
Thank you. Thanks, Sharanya. Next question, Zhi Wei.
Hi, Zhi Wei from Macquarie. Thank you for your presentation. Congrats on a good set of results. I have three questions, right. One on ship chartering, and the other ones are more on repairs and upgrades, happier things. Ship chartering, you had about SGD 57 million operating profit this half, which is about 10% of your group operating profit. You are selling Aquarius Brasil, which is a good thing. It does contribute quite a chunk of your earnings, if I understand it correctly. Kind of keen to understand how that line item, the operating profit, will move post-divestment. That's the first question. Second question is on repairs and upgrade. You talk about a stronger performance expected in second half of 2026. I know you're sitting in somewhat of a cruise vessel upgrade cycle, which tends to do pretty well for Seatrium, right?
If you look at the last, I think it was 2019. Then it was interrupted by 2020, 2021. Dry dock schedules happen every five years, so we should be sitting in one right now. Maybe you can elaborate about the upside that you're seeing on that front. The last question is really, in Brazil, you are now exploring more repair as well as FPSO retrofit work. How do we think about any upside from that? Thank you.
Maybe I'll take the first question. On the ship chartering line, once the Aquarius Brasil transaction closes, there'll be nothing, right, because we have sold all our ship chartering business. From a financial perspective, actually, okay, the structure for the Aquarius Brasil is a little bit complicated. Maybe I'll share a little bit so you can then, I guess, model it out. There's a small amount that is given upfront as the deposit. Then over the next 18, 24 months, where the Petrobras charter is still there, we have agreed with the buyer for that they will pay us effectively the net proceeds that we would've gotten, plus a little bit more. Okay? Then at the end of the two-year contract, there will be a bullet payment where they pay us the remaining value.
From an economic value perspective, it is slightly better until the end of the Petrobras contract, and then we'll receive the remaining payment at the end. Roughly, the last payment is about 45% of the total sale value. It may not appear in that line, but it will appear in another line in the coming two years, basically.
Your question on cruise. We do see quite a buoyant market. It is a very important market for us. Dry dock schedule is the key, and if you take a look, we are the market leader for cruise upgrade because of the extensive logistics requirement and the know-how. We do expect some wins in terms of the cruise segment, but I just want to basically sell that, not only that segment a little bit. Our R&U, when we talk about higher value type of contracts, it's not just cruise. We do have naval contracts. We have always said that the U.K., U.S., New Zealand, Australian naval vessels are also docking and doing works with us. Those are relatively good margin type of projects. Offshore drilling rigs is also a segment that is good for us, and that's not just Singapore. We have always been in the market.
That's why Brazil is making some move. In fact, they are quite successful in getting some of the drilling repair and upgrades in Brazil, which will give us quite good margin from there. I think that the local benefit in terms of activity will come, and I hope I didn't go too far off from cruise because I just don't want the impression that only the cruise vessels are giving us. We love that. Actually, our team has a segment group of people that are very built in with the cruise segment. That's a different segment of customers. The answer is yes. That's why we are saying that in the coming half or even for the next year or so, these are the few segments that are relatively active out there.
If you look at our Tuas Boulevard yard today, the docking and actually the quayside is almost full. A big chunk of it is also scheduling it out with our customers. We have always been saying that we need all the customers to be in a position for us to understand when is their docking schedule and when do they need that. It's coming to a good period whereby we are able to term it out.
Sure. Let me help you out here. The reason why I ask is your cruise upgrades, for example. You've done two upgrades in first half. Each upgrade is a SGD 50 million-SGD 100 million contract. The margins are more than 20% of your mid-teens gross margin of your EPC. Considering the pipeline and the wave of upgrades and dry docks that you see from cruise vessels, considering the large quantities, contract values that's coming in, do you expect this to reasonably improve your margin and roughly by how much?
As mentioned, that is why I'm saying that there's not only the cruise market. I think I'm just giving you a hint that the segment that I mentioned just now probably will give margins roughly around the same. Improve the overall margin, I don't know whether CFO has a calculator with him, but I believe it's a blended sort. I don't think we calculate how it improves our margin that way. Suffice to say, R&U as a whole, we are expecting it to pick up a little bit. You want to add anything?
Yeah. We've guided before R&U segment. The margins are better than the mid-teens that we have talked about for the EPC. That's consistent across the defense, the naval, the cruise ship, and all those segments.
Fine. Last question. Your defense repair value, roughly, how much is it?
It depends on the contracts.
Versus, say, a cruise ship.
Yeah. Because it's R&U, it's very difficult for us to predict. It depends. Sometimes when the ship comes in, it may be a SGD 10 million, SGD 20 million contract. When it leaves, it can be SGD 100 million or SGD 200 million contract. We wish that's the trend, but it's not guaranteed. Sometimes it's about, like what I mentioned, the key is to be at the front foot and get the customer to trust us. The main value proposition is that when you come in, you will get out as promised. I think we have basically delivered that right across all our customers. That's why they are able to get onto the table with us on the docking schedule and all this.
Thank you.
Thank you. One more question from the back.
Thank you. Hi, I'm Ting Nan from Upstream. Thank you for the comprehensive sharing today. I just wanted to know a bit more about your FLNG new build business that you mentioned briefly earlier. You mentioned that your technology team is developing the new build business, could you share a bit more about what capabilities in addition are you looking at? Where will the new build vessels likely be built? Is there a timeline for the commercial readiness and the competition for tendering of these new build vessels?
Yeah.
Thank you.
As of now, we are able to tender a new build FLNG. That I want to be clear. We have the capability of doing a new build. At the end of the day, it's about economics. It's about how we extend the track record. When we do the FLNGX, it's basically to take a look at how we can control the design and also the cost a lot better by having designing that. More of a yacht-centric type of design. Whether there's any timeline or when to market, it's already in the market. It all depends when someone pull the trigger and when the tender will be concluded. Right.
Thank you.
Thank you. I think this brings us to the end of our results briefing today. Should you require further clarifications, please feel free to reach out to us at our investor relations email address. Thank you very much and have a lovely day ahead.
Thank you.
Thank you. For those of you here, you can join us for lunch at the next room