Sembcorp Marine warns of continued losses in first half of 2021

Sembmarine on June 24 proposed an additional $1.5 billion rights issue to shore up its financial position.
Sembmarine on June 24 proposed an additional $1.5 billion rights issue to shore up its financial position.PHOTO: SEMBCORP MARINE

SINGAPORE (THE BUSINESS TIMES) - Sembcorp Marine (Sembmarine) estimates losses for the six months ended June 30 will likely be in the region of the full-year losses incurred for 2020, according to a profit guidance on Monday (July 12).

This comes as the offshore and marine player expects incurring additional costs arising from delays in project execution as a result of the pandemic. These additional costs are due to work rescheduling, extra sub-contract work, additional material usage and other staff turnover-related costs.

Thus, provisions will be made for the group's first-half results for the costs to be incurred to complete the projects over the next six to 18 months.

"These provisions will have a material adverse impact on the group's H1 2021 results," Sembmarine added. Its results for the period are scheduled for release on July 29.

Sembmarine reported a $583 million net loss  for 2020, including $162 million in pre-tax asset impairments and provisions for the fourth quarter of last year.

Sembmarine on June 24 proposed an additional $1.5 billion rights issue to shore up its financial position and accelerate its pivot towards clean energy. It also said it had inked a memorandum of understanding with Keppel Corp to explore a potential merger of Sembmarine and Keppel Offshore & Marine.

The group further guided that labour shortages, together with supply chain constraints, have resulted in further delays in the completion of these projects. On top of increased manpower and other related costs, revenue receipts were also significantly impacted. The group said it will make full provisions for these increased costs in its first-half results.

Sembmarine shares fell 1.6 per cent to 12.1 cents on Monday, after the profit warning.