Seatrium undertakes ‘holistic’ business review; net order book hits $20 billion
Sign up now: Get ST's newsletters delivered to your inbox
Seatrium, formerly known as Sembcorp Marine, says projects under execution make up about $19.9 billion of its net order book.
PHOTO: SEMBCORP MARINE
Chong Xin Wei
Follow topic:
SINGAPORE – Seatrium, whose net order book crossed $20 billion in the first quarter, is not “leaving any stones unturned” in its strategic review, which is set to be wrapped up by the year end, said its top executive.
The company, formerly known as Sembcorp Marine before its merger with Keppel Offshore & Marine (Keppel O&M), has a market capitalisation of some $8.5 billion. The giant merger was completed about a month ago.
The “holistic” review will, among other things, take a look at Seatrium’s capital structure following the merger, as well as how best to position itself to tap growth opportunities amid the global green energy transition, said Seatrium chief executive officer Chris Ong during a virtual briefing on the company’s first-quarter business update on Friday.
“Right now, we have started to take a look at the two companies – where are the synergies to harness... (and) to focus on executing the jobs... and make full use of all capacity we have... to get the best returns from the projects we have already secured,” said Mr Ong.
As for the capital structure review, Mr Ong said: “It is still largely made up of two very complex companies, and we will like to take a look at our debt, asset holding structure and, of course, at the end of the day, the sustainability of the cash flow as a whole... and also what are the targets to prepare the company for growth.”
The review will also consider if the company would need to undertake a share consolidation, given its very high base of outstanding shares as a result of the merger, said Mr Ong in response to a question on whether a share consolidation exercise would be in the offing.
“Do we have concrete plans (on share consolidation) at this moment – the answer is ‘no’. I think in the nearer future, we will take a look at this.
“This is part of the capital structure review... It will not be immediate,” replied Mr Ong.
One key aspect of the review is to determine how the clean energy transition will play out amid macro uncertainties and geopolitical tensions as the company “doubles down” on growth areas in the renewables space, including offshore wind projects.
“So, the strategic review will come up with potential guide posts and also levers to pull on how the... changes will affect energy transition,” he said, adding that this could include energy security and new energy solutions such as carbon capture, utilisation and storage.
In its latest update, Seatrium disclosed that 39 per cent of the group’s net order book comprised renewables and cleaner or green solutions.
“That is quite a feat,” remarked Mr Ong, adding that the company expects the order pipeline for renewable projects for 2023 to come mainly from Europe, and also potentially from the United States.
Seatrium’s largest offshore renewable project involves the supply of high-voltage direct current electrical transmission systems for three offshore wind farm projects – each valued at about €2 billion (S$2.9 billion) – from European grid operator TenneT TSO.
The company added that it has also secured a contract worth more than $500 million for two offshore wind farm substations from Empire Wind, a joint venture between Equinor and BP.
Further, it has entered into an agreement with Chevron Shipping Company to provide the latter with engineering, procurement, installation and commissioning services for its liquefied nitrogen gas fleet modification and upgrade project to support its energy transition goals.
Projects under execution make up about $19.9 billion of its net order book, while ongoing repair and upgrade projects contribute to the remaining, said Seatrium.
The group also recorded higher overall cash balance following the completion of the combination with Keppel O&M, as well as improvement in operating cash flows from the completion and delivery of key projects.
Amid the ongoing energy transition and rising concerns about energy security, Seatrium expects the industry outlook for oil and gas, offshore renewables and other green solutions to continue to improve.
“With a combined order book of over $20 billion with completions scheduled from 2023 to 2030, the group remains focused on executing well on all its existing projects,” it added.
Shares of Seatrium closed down 1.59 per cent at 12.4 cents on Friday.
