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Sembcorp Marine says it remains loss-incurring for 3Q in business update

Felicia Tan
Felicia Tan • 2 min read
Sembcorp Marine says it remains loss-incurring for 3Q in business update
It adds that it expects losses to continue into the 4QFY2020.
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In its interim business update for the 3QFY2020 and 9MFY2020 released on Nov 11, Sembcorp Marine (SembMarine) says the group continued to incur losses during the quarter with low overall business volume and execution delays.

It adds that it expects losses to continue into the 4QFY2020.

See: Sembcorp Marine is expected to 'remain loss-making' in FY20 and FY21, estimates KGI Securities

This comes as SembMarine’s Singapore yards began to resume production activities in early July, following the gradual reopening of the circuit breaker measures that took place from April to June 2020.

“Our operating yard workforce (including sub-contractors) have now increased to almost full workforce levels,” it says in a statement via SGX.

The recovery of oil prices since the March collapse has also seen reviews of deferred projects by the oil companies. This has led to an improvement in new orders visibility. The group says it is also “increasingly active” in bidding for new projects and discussing the resumption of delayed projects.

As at Sept 30, SembMarine is currently seeing through a total of 15 projects worth $1.78 billion under execution. This includes the contract for the design and construction of an LNG bunker vessel for Mitsui OSK Lines (MOL).

The group’s repairs & upgrades business is also undertaking $0.33 billion of ongoing jobs and new orders that were secured during the quarter.

“In consultation with our customers, delivery dates for most of our existing projects have been rescheduled by between 3 to 12 months. To-date, there has been no cancellation of any of our existing projects,” it says.

The successful completion of the group’s $2.1 billion rights issue that was first launched in June 2020, has strengthened the group’s liquidity position and balance sheet.

See also: Sembcorp Marine to raise $2.1 billion via rights issue; parent Sembcorp Industries to distribute stake in-specie to shareholders, It's official: Sembcorp Industries and Sembcorp Marine will decouple and Sembcorp Marine fails to win full support on rights issue

“Sembcorp Marine is now focused on executing our projects and securing new orders. We will work to manage our costs and liquidity prudently to ensure we are able to sustain our operations and ride through the severe industry downturn and Covid-19 pandemic,” it adds.

Shares in SembMarine closed 1.1 cents higher or 8.9% up at 13.4 cents on Nov 10.

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