Company anticipates significant financial impact as delays and costs continue to mount
Sembcorp Marine (Sembmarine) has warned of “significant losses” in the second half of 2021, with potential figures matching the S$647 million loss experienced in the first half of the year. The company attributes this to escalating costs and delays in project completions, driven by the ongoing pandemic and supply chain disruptions.
Challenges with Project Delays and Labour Shortages
The company is experiencing continued difficulties, including delays in equipment deliveries due to border restrictions, longer lead times for new components, and slower-than-expected recruitment of skilled labour. Furthermore, attrition among skilled workers and work disruptions caused by pandemic-related measures, such as stop-work orders, have further hampered operations.
Out of the 16 ongoing projects, five have experienced delays of up to three months. Sembmarine also expects substantial cost overruns, though it is actively negotiating with counterparties to mitigate the impact.
Uncertain Financial Outcome
The full extent of the company’s losses will only be determined closer to the end of the year, with Q4 performance playing a crucial role. Several factors, such as the persistence of Covid-19, workforce availability, health considerations, and potential disruptions, will affect the final figures.
Sembmarine is also in discussions to adjust delivery timelines, hoping to limit further financial impact.
Commitment to Long-Term Growth
Despite these challenges, Sembmarine has reaffirmed its dedication to completing projects and maintaining strong relationships with stakeholders. The company remains optimistic that its strategic diversification into the clean energy sector will provide a stable foundation for sustainable future growth.
Sembmarine’s shares closed at S$0.081 on Tuesday, down by 1.2%.
