Sembcorp Marine disappointed by low order intake. Expects tough 2H 2019

Singapore’s vessel and rig builder Sembcorp Marine reported a net loss of $9.3 million in the second quarter of 2019, citing continued low overall business volume, and posting a disappointing order intake in the first half of the year.

While posting a quarterly loss, this is an improvement compared to a loss of $56,5 million in the second quarter of 2018. The company’s turnover in the second quarter fell to $731 million down from $1,67 billion a year ago.

Sembcorp said Tuesday its turnover had decreased predominantly due to lower revenue recognition from rigs and floaters and offshore platform projects, mitigated by higher repair and upgrade revenue.

Also, for the first half of the year, the company added $175 million in new orders, the amount Sembcorp Marine described as disappointing.

Sembcorp Marine blamed the disappointing order intake on a tender cancellation arising from changes in project ownership, and delays in final investment decisions for several projects.

The company’s net order book at the end of the first half of the year was $5.2 billion. However, excluding the seven Sete drillships (which have been classified as projects in a suspended state,) the company’s net order book stands at $2.1 billion.

Orderbook the main priority

Providing his take on the state of the offshore and marine industry so far this year, Wong Weng Sun, President & CEO – Sembcorp Marine: “The offshore and marine industry continued to gradually recover. Global capex spend for offshore exploration and production activities continued to improve, especially for production facilities. Offshore drilling activities have also gradually improved. Overall, the industry remained at its initial stage of cycle recovery, with long orders development period and competition remained intense.”

Sembcorp Marine, which earlier this month delivered the world’s largest SSCV vessel – Sleipnir – said its main priority is building up the order book.

Also, while Sembcorp has traditionally been seen as a rig and platform builder, most of its orders this year came from other sectors, including construction of a 12,000-cubic-metre (cbm) LNG bunker vessel as well as repair and modernization work on 13 cruise ships.

“With insufficient new orders secured in the last few quarters, the company is expecting the losses for the second half to be higher than the first half,” CEO

“We have been actively responding to an increasing pipeline of tenders and inquiries for various engineering solutions and projects related to the production and gas value chain segments, as well as in specialized shipbuilding projects. We are also participating in front end engineering design (FEEDs) and pre-FEEDs requested by potential customers. We remain hopeful for securing new orders in the foreseeable quarters,” the CEO said.

Despite the hopes and optimism, the CEO also acknowledged the challenges ahead.

He said: “Overall, challenges in the offshore and marine sector persist and it will take some time before we see a sustained recovery in new orders, while competition remains intense and margins compressed. With insufficient new orders secured in the last few quarters, the company is expecting the losses for the second half to be higher than the first half, with the full-year losses projected to be similar in range to last year’s losses.”

Offshore Energy Today Staff

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