Sembmarine dreads double whammy from pandemic and oil price drop

They are expecting business activity to remain low.

Sembcorp Marine (Sembmarine) is expecting to face difficulties in securing new orders amidst the collapse in oil prices, according to a local bourse filing. Further, the COVID-19 pandemic has resulted in delays in the execution and completion of their existing projects.

The pandemic has specifically weighed on its global shipping operations and the repairs & upgrades business. Industry-wide cuts in capital expenditure (CAPEX) have affected the group’s ongoing negotiations and finalisation of new orders, including the Siccar Point Cambo Floating Production, Storage and Offloading (FPSO) project.

The project’s final investment decision (FID) is now postponed until 2021.

“The above have resulted in low overall business volume for the Group. This in turn impacted the group’s revenue recognition and overall bottom line performance,” Sembmarine stated.

So far, Sembmarine revealed that they generated positive cash flow from operations in Q1 and remained in a net current liabilities position, arising mainly from loans maturing in 2020. Net finance costs also rose on the back of ongoing refinancing measures.

“We are finalising with our lenders to refinance and re-profile these loans with longer term maturities. We have adequate existing loan facilities to refinance current borrowings as they fall due,” the group added.

However, Sembmarine is expecting their business activity levels to remain low, except for the repairs & upgrades segment. Overall business volumes for all segments are projected to further weaken for the rest of the year. “Our current priority is to ensure that we have adequate liquidity to sustain operations and ride through this severe downturn,” the firm said.