SINGAPORE (THE BUSINESS TIMES) - Sembcorp Marine (Sembmarine) is expecting a "significantly better" financial performance for its upcoming half-year results due to new contract and order developments as well as an improving industry outlook.
This was stated by the marine and offshore engineering group in its first-quarter interim business update on Wednesday (May 18), where it said six of 12 projects scheduled for delivery in financial year 2022 have been completed in the year to date (YTD).
The latest development has helped to boost Sembmarine's operating cash flows and overall cash balance, such that the group's net debt/equity ratio has improved to 0.38 times as at the end of the first quarter of this year, from 0.49 times as at the end of the fourth quarter of last year.
With the progressive completion of projects, Sembmarine said it has redeployed freed-up resources for other projects under execution as well as to take on new projects.
This includes commencing design work for a new landmark contract from Danish shipping company Maersk to construct a wind turbine installation vessel.
The group further secured multiple contracts for major repairs and upgrades for three United States Navy vessels, and a block booking of nine Maersk container vessels.
Negotiations are also ongoing with the Brazilian Navy for a navy research vessel project, with a contract award expected in the second quarter of this year.
As at the end of the first quarter of 2022, Sembmarine reported a net order book of $1.75 billion - of which 65 per cent are categorised under renewables and cleaner/greener solutions.
The total net order book value to date comprise $1.51 billion of projects under execution, with a total original contract sum of $5.45 billion. Another $240 million are for ongoing repairs and upgrades.
Going forward, Sembmarine noted continued improvement in the industry outlook for oil and gas, renewables and other green solutions. The group added that it is actively responding to new opportunities and is focused on converting its orders pipeline into firm contracts in financial year 2022.
A merger between Sembmarine and Keppel Offshore & Marine (Keppel O&M) is currently under way, and Sembmarine estimates that the order book of the combined entity will comprise more than 50 projects worth about $6.4 billion as at end-2021.
Financial year 2021 revenue of the merged entity is expected to come in at $3.9 billion.
An extraordinary general meeting for Sembmarine shareholders to vote on the Sembmarine scheme and the proposed merger via a separate Keppel O&M scheme is expected to be convened in the fourth quarter of 2022.
Temasek - which is set to become the largest shareholder of the combined entity with a 33.5 per cent stake - will abstain from voting in both schemes and all other resolutions relating to the proposed merger.
"Temasek joins both companies (Sembmarine and Keppel O&M) in asking for the support of their shareholders as the proposed combination is the best way to deliver long-term value creation for shareholders and other stakeholders," said Sembmarine in its business update.
Sembmarine shares ended Tuesday 0.1 cent, or 1.1 per cent, higher at 9.6 cents.