Sembmarine reports $1.75b in net orders in Q1

Sembcorp Marine (Sembmarine) is expecting a "significantly better" financial performance for its upcoming half-year results, owing 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 yesterday, when it said that six of 12 projects scheduled for delivery in financial year 2022 have been completed in the year to date.

The latest development has helped to boost its operating cash flows and overall cash balance such that the group's net debt-to-equity ratio improved to 0.38 times as at the end of the first quarter this year, from 0.49 times as at the end of the fourth quarter last year.

With the progressive completion of projects, Sembmarine said it has redeployed freed-up resources for other projects under execution and to take on new projects - including starting design work for a new landmark contract with Danish shipping company Maersk to construct a wind turbine installation vessel.

The group further secured multiple contracts for major repairs and upgrades of three United States Navy vessels, and a block booking of nine Maersk container vessels.

Negotiations are also ongoing with the Brazilian Navy for a research vessel project.

As at the end of the first quarter, Sembmarine reported a net order book of $1.75 billion - of which 65 per cent comes under renewables and cleaner or greener solutions.

The total net order book value to date comprises $1.51 billion of projects under execution, with a total original contract sum of $5.45 billion. Another $240 million is for ongoing repairs and upgrades.

Going forward, the group noted continued improvement in the industry outlook for oil and gas, renewables and other green solutions.

A merger between Sembmarine and Keppel Offshore & Marine (Keppel O&M) is 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 the end of last year. The FY2021 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 relating to the merger, and the proposed merger via a separate Keppel O&M scheme, is expected to be held in the fourth quarter.

Temasek - 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 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.

Sembmarine shares ended yesterday 0.2 cent, or 2.1 per cent, higher at 9.8 cents.

THE BUSINESS TIMES