Image Credits: Sembcorp Marine
Sembcorp Marine’s Q1 investor report reveals weak performances to continue from 2020
Pandemic related manpower constraints were cited as reasons behind the company’s shortage of skilled workers. Sembcorp added those who departed Singapore the past year are unable to return due to border restrictions – especially from India and Bangladesh. Surprisingly, the company also pointed Singapore’s improving economy resulted in heightened competition, plus workers’ transferring to competing industries affected the company’s projects.
More losses anticipated from Q1 onwards
While Sembcorp Marine did not elaborate further on manpower shortage, the company is expected to bridge the gap to minimise risks of project delays and terminations. Its business interim update for Q1 2020 listed the company’s focus on the renewable energy sector. Jointly with GE Renewable Energy’s Grid Solutions, it secured a contract from RWE Renewables to supply the high voltage direct current (HVDC) electrical transmission system for the 1.4 gigawatt (GW) Sofia Offshore Wind Farm (Sofia). The HVDC system represents Sofia’s second largest contract and is worth approximately £600 million (S$1.12 billion).
The report added, “The contract win for Sofia validates the Group’s push into the renewable energy market and adds to our list of projects secured in the offshore wind sector. Sembcorp Marine is currently building two topsides for the offshore substations at Ørsted A/S’ Hornsea 2 Offshore Wind Farm in the UK North Sea. The 1.4GW wind farm, one of the world’s largest when completed, will supply green electricity to over 1.3 million UK households.”
To diffuse the pessimism, Sembcorp Marine listed four major repair and upgrade projects for Q121. The update stressed the firm’s focus on the safe and timely execution of its existing order book of over S$1.89 billion, including S$0.29 billion of ongoing repairs and upgrades for delivery in 2021. On future orders, the market sentiment improved although the post-COVID-19 recovery remains uncertain. There are increasing signs of active reviews of final investment decisions and improved orders visibility. However competition for new projects remains intense. Sembcorp is still tendering for more than 10 projects in the renewable energy and gas solutions segment.
More losses expected for 2021
Implying more losses are expected for 2021, Sembcorp Marine remarked in their report: “Notwithstanding the challenging operating environment, the Group’s strategic investments have positioned us well for the global transition to a low-carbon economy and the pivot towards cleaner and greener energy sources.
“With the re-introduction of COVID-19 measures in recent weeks, including tighter border controls, the Group’s operations could be further impacted by workforce supply and quarantine restraints. Current and future restrictions on travel and transportation could also disrupt global supply chains. Resolving the skilled manpower shortage on a timely basis is the Group’s key priority to address the risk of project delays or terminations.”