Sembmarine posts S$1.42b order book at end-Q3

SEMBCORP Marine S51 : S51 0%on Thursday (Nov 11) posted an order book of over S$1.42 billion as at the end of the third quarter. This includes S$180 million of ongoing repairs and upgrades for delivery by 2022, according to an interim business update.

Out of 16 projects under execution, 2 are scheduled for completion in FY2021 and another 12 in FY2022. The remaining 2 will progressively complete by 2025, the offshore and marine builder said.

As at end-September 2021, there are 3 renewable solutions projects under execution, 6 process solutions projects, 4 gas solutions projects, 1 ocean living solutions project and 2 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 5 projects between 1 and 3 months

The delivery of equipment has been delayed and longer lead times are needed for purchases of new components. The group said it took active measures to recruit from alternative sources, but recruitment in Q3 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.

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As previously reported, these increased costs, as well as losses from added delays, will result in significant losses for H2 2021, which could potentially be in the range of losses reported for H1 2021. In July this year, the group recorded a loss of S$647.2 million for H1 2021.

On new orders, the group said it saw order visibility across its product segments improve in FY2021. 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 S$0.082 on Thursday.