SMM to incur losses in 1st half 2021 and needs $2.5 - S$4 billion orders to survive

Sembmarine to stay focused on clean, green solutions worst of writedowns likely over

SEMBCORP Marine (Sembmarine) on Tuesday reiterated its focus on " cleaner and greener solutions" after lower oil prices caused it to post an even larger net loss for the second half of its financial year ended Dec 31, 2020. Management also sees an improved outlook for FY2021.

In a call to discuss the company' s latest earnings, Sembmarine' s chief executive Wong Weng Sun and finance director William Goh said the group had already been shifting the focus of its efforts and resources to green opportunities since 2015.

Although Keppel Corporation' s exit from the business of building oil rigs might mean less competition for Sembmarine, Mr Goh said this is not an area where the group sees potential " in the immediate future" .

Revenue from building rigs recorded an 81 per cent year-on-year (y-o-y) fall to S$158 million, to make up a mere 10 per cent of total revenue in FY2020.

" The question for us is whether demand in the rigbuilding segment will recover, and this is typically driven by new designs," said Mr Goh, adding that these include greener solutions or smaller carbon footprints.
Sembmarine intends to work on shaping its product mix such that it can improve its profit margin.

The company reported a net loss of S$390.4 million for H2 FY2020, versus a loss of S$130.3 million a year ago. The weaker performance was partially due to asset impairments and provisions. Excluding these, the net loss for the period would have been S$246 million.

The group' s turnover fell 54.9 per cent to S$604.1 million, from S$1.34 billion a year ago.

For the full year, SMM' s net loss widened to S$582.5 million from a loss of S$137.2 million a year ago. Turnover was down 47.6 per cent to S$1.51 billion.

Mr Goh said Sembmarine is likely to continue booking losses in the first half of FY 2021, although the group is unable to accurately estimate the extent of losses at this point as this is generally " driven by a combination of smooth execution of existing projects and securing new orders that contribute to topline" .

But as far as writedowns of Sembmarine' s assets or yard facilities go, Mr Goh was hopeful that the worst is over.

He said the company does evaluations on a periodic basis and will make provisions as necessary, but added that Sembmarine builds its assets " with the future in mind" .

The group' s assets were built to meet changing requirements in the markets and can cater to the renewable sector too, he said.

Like other companies in the industry, Sembmarine was a victim of project deferrals in 2020 as the Covid-19 pandemic hampered business activity. Several projects were deferred in the first three quarters of 2020, but Mr Goh said order visibility had improved significantly from Q4.

Sembmarine began 2020 with a net order book in excess of S$2 billion with completion and deliveries stretching into 2022, but some projects were rescheduled by as much as 12 months.

As at end-2020, the group' s order book stood at S$1.82 billion. This comprised S$1.5 billion of projects under execution and S$310 million of ongoing repairs and upgrades projects with firm deliveries this year.

Giving a " very broad estimate" , Mr Goh said Sembmarine would require anywhere from S$2.5 billion to S$4 billion in orders - both existing and new - to turn profitable.

Sembmarine has not booked any new orders this year, but Mr Goh expects orders this year to be " better than last year" barring any external factors such as a worsening of the Covid-19 situation globally.

More work is expected for repairs and upgrades in particular, amid a shift to greener solutions. Mr Goh is expecting contributions from this segment to improve this year.

In FY2020, revenue from repairs and upgrades declined 30 per cent to S$425 million. This segment contributed 28 per cent of total revenue.
All tmt freezes salaries and bonuses or take token 1$ home until biz turn around. Can they do that? 450 becomes 015.
Show us your resolve.
Look like SMM will only be profitable in 2022.

If invest in SMM, need to wait until 2022 to make money in SMM shares
Every sonce ho ching took over , everything collapse until buey lin chu ...
However we wont be surprised if they sold away the business to outsiders ,
SMM will return to profitability in less than 1 year ...

Don't know how these dumbfcuks run the business ...

Our teacher says this :

" Verily I say unto you, Whatsoever ye shall bind on earth shall be bound in heaven: and whatsoever ye shall loose on earth shall be loosed in heaven. "

24-2-2021 1:56 PM
wallstreetraider said:
Every sonce ho ching took over , everything collapse until buey lin chu ...
However we wont be surprised if they sold away the business to outsiders ,
SMM will return to profitability in less than 1 year ...

Don't know how these dumbfcuks run the business ...


If the CEOs managing these GLCs are from the military they will run it like a military unit. Laughing
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