Amid the heat of the coronavirus (COVID-19) pandemic, the Singapore shipyard group has had to shutdown production activities at all yards since April, leading to the current loss deepening from the loss of SGD7m for first half of 2019.
Sembmarine’s yard workforce, including sub-contractors, is down to 850 persons from about 20,000 since the government imposed its COVID-19 ‘circuit breaker’ measures disallowing migrant workers from leaving their dormitories.
Sembmarine’s yards had to stand down and discontinue production activities, resulting in significant delays to project executions.
Wong Weng Sun, president and ceo of Sembmarine, said the group’s immediate priority is to address urgent liquidity needs to fund operations and ride out the protracted downturn in the offshore and marine industry, which has been saddled with profound structural changes in the oil and gas sector and intensifying international competition.
“We have also implemented salary reductions in Singapore and in our overseas companies. I have volunteered a 50% pay cut, while senior management will take a 15% salary reduction; middle management – 10%; and the rest of our employees – a 5% cut. Those earning less than SGD1,800 a month will not have any salary reduction,” Wong said.
“The Sembcorp Marine Board is also continuing with a 10% reduction in director’s fees this year, similar to FY2019,” he said.
Wong added that given the delays in executing existing projects, and with new orders likely to remain depressed in 2020, Sembmarine now foresees recovery will be pushed out to 2021 and beyond.
The net order book was SGD1.91bn as at end-June, down from SGD2.4bn as at end-2019.
With the lifting of some COVID-19 measures in Singapore since June, Sembmarine has also been able to gradually resume project executions.
“How soon the group’s workforce will be allowed to return to full strength will determine the business outlook in subsequent quarters. In this difficult business environment, Sembcorp Marine expects its losses to continue into the foreseeable quarters,” Wong said.
Copyright © 2020. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited.