Pay cuts at Sembmarine as yard shutdowns bring H1 loss to $192m

Sembcorp Marine (Sembmarine) has posted a net loss of $192.1 million in the half-year ended June 30, due to the shutdown of production activities at all its Singapore yards since April as a result of the Covid-19 pandemic.

By comparison, the group recorded a net loss of $6.8 million in the same period the year before.

Revenue in the first half was $906 million, down 41 per cent from the same period a year earlier.

All segments posted losses in the six-month period, with the exception of the repairs and upgrades business, which reported higher profits on better product mix of higher-margin upgrade projects executed in the first quarter of this year.

Sembmarine president and chief executive Wong Weng Sun said yesterday: "We had positioned ourselves for recovery in 2020, but we were unexpectedly hit by Covid-19 and the collapse of oil prices.

"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."

The net order book was $1.91 billion at end-June, down from $2.4 billion at end-2019. "While we have yet to announce significant new orders this year, we have resumed discussions on several project opportunities," Mr Wong said.

With the easing of Covid-19 measures last month, production activities gradually resumed from early this month, but Sembmarine continues to right-size its workforce.

Mr Wong has volunteered to take a 50 per cent pay cut. Senior management will take a 15 per cent salary reduction; middle management will take 10 per cent less.

All other employees in Singapore and overseas will take a 5 per cent pay cut, except for those earning under $1,800 a month. Sembmarine's board is also continuing with a 10 per cent reduction in director's fees this year, similar to FY2019.

All non-essential capital expenditures have been deferred. Capex in the first half of this year was $58 million, less than a third of the amount incurred in the first half of last year.

Sembmarine remained in a net current liabilities position of $259 million as of June 30, due mainly to term loans maturing over the next 12 months.

With no operating activities for almost three months in the first half of this year, cash flow from operations was a negative $122 million, against a positive $273 million in the corresponding period last year.

Net gearing was 1.35 times as of end-June, compared with 1.14 times at end-2019. First-half loss per share was 9.19 cents, widening from a loss per share of 0.33 cent in the first half of last year.

Net asset value per share was 94.77 cents as of June 30 this year, down from 103.96 cents as of Dec 31 last year.

THE BUSINESS TIMES