SEMBCORP MARINE INTERIM BUSINESS UPDATE FOR Q1 2020

May 15, 2020

Sembcorp Marine has issued its interim Business Update for the first quarter of 2020. The Singaporean company has been adversely affected by the global spread of the COVID-19 pandemic, along with all other sectors and industries in the global economy. Measures to contain the pandemic have severely disrupted transportation, supply chains, manpower access and plant operations, with resulting reduction in the demand for oil and energy.
Operations Review
Industry-wide cuts in CAPEX have affected the Group’s ongoing negotiations and finalisation of new orders, including the Siccar Point Cambo Floating Production, Storage and Offloading (FPSO) project. The project’s FID is now postponed to 2021.
Delays in executing our existing orders and lack of new orders have resulted in lower revenue recognition. COVID-19 has also affected global shipping operations and adversely affected our Repairs & Upgrades business.
The above have resulted in low overall business volume for the Group.
Sembcorp Marine’s projects in progress include:
• Johan Castberg and Karish newbuild FPSOs;
• Shell Vito and Shell Whale Floating Production Units (FPUs);
• Transocean drill ships;
• Ørsted Hornsea 2 offshore wind farm substations;
• Jan De Nul Formosa 2 offshore wind farm jackets fabrication;
• Tyra offshore platforms;
• Norled battery-powered roll-on/roll-off passenger (ROPAX) ferries; and
• MOL LNG bunker vessel.
Other ongoing repairs and upgrades projects include:
• Floating Storage & Regasification Unit (FSRU) Karmol LNGT Powership Africa
• FSRU Karmol LNGT Powership Asia; and
• Floating Storage Unit (FSU) LNG Flora.
Sembcorp Marine makes every effort to progress the above projects to completion and will continue to right-size its resources in response to the activities outlook. The company said: “We will also defer all non-essential CAPEX to preserve our cash flow and manage our overall liquidity with prudence and discipline.
On April 21 when the Ministry of Manpower announced movement restriction measures that disallowed migrant workers from leaving their dormitories for work, our operating yard workforce of about 20,000 persons was substantially reduced to 850 persons.
Except for the Repairs and Upgrades segment, the Group’s business activity levels remain low for all other segments. Overall business volumes for all segments are expected to further weaken for the rest of the year.
In light of the challenging and deteriorating business environment, our current priority is to ensure that we have adequate liquidity to sustain operations and ride through this severe downturn. We continue to focus on safe and timely execution of our projects and to hunt for pockets of opportunities less affected by the current business climate. The Group expects the previous trend of losses to continue in the foreseeable quarters.”

(Source and image: Sembcorp Marine)