Sembcorp Marine warned Tuesday it expects to continue to face losses in the second half of 2021, after posting a loss of S$647 million for the first half of the year, citing uncertainties arising from the Covid-19 pandemic and related border controls and workforce supply issues.
The losses for the second half could be in the range of the losses reported in the first half, but the magnitude won’t be quantifiable until closer to the end of the year, SembMarine said in a filing to SGX.
“The disruption of supply chains and workforce reductions had affected its productivity and impacted the progress of its projects, resulting in
delays and unforeseen cost overruns,” the company said.
“While the group has made some progress in managing the delays in project completions, shareholders should note that Covid-19 related measures continue to have a serious impact on the group’s performance,” the company added.
In the third quarter, SembMarine said it has faced execution challenges including: delays in equipment delivery due to border controls in some countries, a longer lead time on purchasing new components due to supply chain constraints, slower-than-expected recruitment of additional skilled labor, continuing attrition of skilled workers, and work disruptions, including stop-work orders, due to measures to control Covid-19 spikes.
Of the 16 projects under execution, five have been delayed by one to three months, making the company likely to incur further material cost overruns, SembMarine said, adding it was in negotiations with counterparties to mitigate the cost overruns.
But SembMarine added, “the group is determined to ride through this difficult period, and remains committed to completing its projects and doing its best for its customers and stakeholders.”
“The group continues to believe that its ongoing strategic diversification and expansion into the clean energy sector will provide a foundation for it to achieve sustainable growth. However, the group needs the support and patience of all its stakeholders to ride through these very trying times,” the company added.