19 Oct 2021
sharanya-pillai
SEMBCORP Marine (Sembmarine) Sembcorp Marine: S51 -1.22% expects to post “significant losses” in H2 ending Dec 31, 2021, potentially in the range of the S$647 million loss in the first six months of the year, the company announced in a bourse filing on Tuesday (Oct 19).
This is mainly due to the increased costs to complete its projects, as well as the losses arising from the added delays. Even though Sembmarine has made some headway in managing project completion delays, the pandemic continues to impact performance.
Key challenges are delays in the delivery of equipment arising from border controls in some countries; purchase of new components requiring a longer lead time due to supply chain constraints; and slower than expected recruitment of additional skilled labour.
Sembmarine has also been hit by the continuing attrition of skilled workers and work disruptions, including stop work orders, due to measures to contain the pandemic.
Of its 16 projects under execution, five have been further delayed by between one and three months. The company expects to incur cost overruns of a “material amount”. It is currently in talks with counterparties to mitigate the overruns.
Sembmarine will only be able to quantify the actual losses closer to the end of the year, depending on its Q4 performance. The magnitude of losses incurred will depend the continuing impact of Covid-19 measures on the construction progress of the projects, including the availability of labour, the health of workers and supply chain delays.