Sembcorp Marine posted a net loss of S$192 million (US$138.3M) for the six months to June 2020, following the “severe deterioration” of activities at all its Singapore yards as a result of the Covid-19 pandemic and amid a planned de-merger from parent Sembcorp Industries.
Sembcorp Marine’s results in the same six months of 2019 had amounted to a loss of S$7M.
The first-half 2020 earnings showed group revenues were S$906M and the net order book had S$1.91Bln of work outstanding, including liquefied natural gas sector ships such as LNG-powered vessels, bunkering ships and floating LNG storage.
A total of 74 vessels were repaired or upgraded at Sembcorp Marine yards in the 2020 first half, less the half the total of 153 vessels in the first six months of 2019.
The Sembcorp construction and conversion work for LNG mainly affects projects involving joint ventures of Japanese shipping company Mitsui OSK Lines.
Since April, when the Singapore government imposed its Covid-19 “circuit breaker” measures, in particular movement restrictions that disallowed migrant workers from leaving their dormitories for work, there was a substantial reduction in the group’s operating yard workforce (including sub-contractors) from about 20,000 to 850 persons.
Sembcorp Marine’s Singapore yards had to stand down and discontinue production activities, resulting in significant delays to project executions.
As a consequence, all divisions posted losses for the six months period, with the exception of Repairs & Upgrades which reported higher profits.
The company said Specialised Shipbuilding revenue was S$35M, up from S$7M in the year-ago period on higher earnings for Roll-On-Roll-Off passenger (Ropax) ferries as well as the LNG bunker vessel projects.
Revenue from Repairs & Upgrades totalled S$258M, which was 5 percent higher than the $245M in the 2019 first half.
This was due to higher revenue per vessel at S$3.49M from several upgrade projects for floating storage and regasification units (FSRU) and cruise ships.
Revenue for the Rigs & Floaters segment was S$459M, well down on the S$1.22Bln recorded in the 2019 first half.
Offshore Platforms revenue was S$130M. This included platforms successfully delivered for the Tangguh gas modules project in June 2020 from Sembcorp Marine’s Batam yard in Indonesia.
Singapore’s state wealth fund Temasek recently stepped in to support a S$2.1Bl rights issue by Sembcorp Marine to help its finances and as it also demerges from its parent company Sembcorp Industries.
Temasek in 2019 had offered to buy control of another Singaporean conglomerate Keppel Corp, whose businesses includes the hard-hit rig-building sector.
Sembcorp Industries owns 61 percent of Sembcorp Marine.
Sembcorp Marine President and Chief Executive Wong Weng Sun said during an earnings call on July 15 that the company had been positioned for recovery in 2020 before being hit by the double crises.
“Given the delays in executing our existing projects, and with new orders likely to remain depressed in 2020, the group now foresees that recovery will be pushed out to 2021 and beyond,” explained Wong.
“While we have yet to announce significant new orders this year, we have resumed discussions on several project opportunities,” added the CEO.
He has also brought in pay cuts across the board in all divisions of the company.
Wong said he had volunteered to take a 50 percent pay cut, senior management will take 15 percent salary reductions and middle management will be paid 10 percent less.
All other employees in Singapore and overseas will take a 5 percent pay cuts, except for those earning under S$1,800 a month.
