SINGAPORE (July 15): Sembcorp Marine (Sembmarine) has reported a weaker set of results for the six months ended June 30, 2020 as the novel coronavirus (Covid-19) crippled many industries, including offshore and marine.  

The company plunged into a wider net loss of $192 million in the half-year period, compared to a net loss of $6.8 million in the same period last year.

This came on the back of a revenue decline of 41.2% to $906.2 million from $1.54 billion a year ago.

The disappointing set of results was largely due to the shutdown of production activities at all the company’s Singapore yards since April, owing to the implementation of the circuit breaker measures.

Sembmarine says movement restrictions had disallowed its migrant workers from leaving their dormitories for work.

This led to a substantial reduction in the company’s operating yard workforce – including sub-contractors – to 850 from 20,000 persons.

As a result, many of its ongoing projects were delayed.

Sembmarine notes that all segments posted losses for the six months period.

This, however, excluded the repairs & upgrades segment, which reported higher profits on better product mix of higher margin upgrade projects.

The company says it did not secure any “significant new contracts” in 1H 2020. As at June 30, 2020, its net order book was $1.91 billion.

Given that Singapore is currently in Phase 2 of the reopening of its economy, Sembmarine says it has gradually resumed yard operations on July 6.

The company adds that it is working closely with its customers to restart the execution of existing projects.

Still, the company expects to incur losses in the foreseeable quarters given the “difficult business environment”.

As at June 30, 2020, Sembmarine has net gearing level of 1.35 times, up from 1.14 times as at Dec 31, 2019. This excludes the $1.5 billion subordinated loan from its parent company Sembcorp Industries.

The company says it is looking to refinance some of its term loans with longer term maturities.

On June 8, the company announced a proposed $2.1 billion renounceable underwritten rights issue, followed by a proposed demerger from Sembcorp.

The demerger exercise will be conducted via a distribution in specie of Sembmarine shares owned by Sembcorp to the latter’s shareholders.

Sembmarine says it believes that the proposed rights Issue will strengthen its financial position and is in the best interests of its shareholders.

Sembmarine closed up 1 cent or 2.3% at 45.5 cents, with trade volume of 2.5 million shares.