SINGAPORE (THE BUSINESS TIMES) – Sembcorp Marine on Thursday (Nov 11) posted an order book of more than $1.42 billion as at the end of the third quarter. This includes $180 million of ongoing repairs and upgrades for delivery by next year, according to an interim business update.
Out of 16 projects under execution, two are scheduled for completion in financial year 2021 and another 12 in financial year 2022. The remaining two will progressively be completed by 2025, the offshore and marine builder said.
As at end-September this year, there are three renewable solutions projects under execution, six process solutions projects, four gas solutions projects, one ocean living solutions project and two advanced drilling rig solutions projects.
Sembmarine said it continues to face Covid-19 supply chain constraints and shortages of skilled workers that are seriously affecting the 16 projects under execution, delaying the scheduled completion of five projects between one and three months.
The delivery of equipment has been delayed and longer lead times are needed for purchases of new components. The group said it has taken active measures to recruit from alternative sources, but recruitment in the third quarter was slower than expected due to spikes in Covid-19 infections in the period.
Sembmarine will likely incur further cost overruns of “a material amount”. It is in negotiations with its counterparties and taking other measures to mitigate these cost overruns.
As previously reported, these increased costs, as well as losses from added delays, will result in significant losses for the second half of this year, which could potentially be in the range of losses reported for the first half of the year. In July this year, the group recorded a loss of $647.2 million for the first half.
On new orders, the group said it saw order visibility across its product segments improve in financial year 2021. It is actively working on multiple projects, with tenders in progress for its process solutions segment, which covers FPSOs (floating production, storage and offloading vessels), FSOs (floating storage and offloading vessels) and FPUs (floating production units).
On its outlook, Sembmarine expects significant growth in renewables and other clean energy segments over the next decade and beyond, despite the challenging circumstances.
Shares of mainboard-listed Sembmarine ended flat at 8.2 cents on Wednesday.