Sembcorp Marine swings to loss in Q3, slashes jobs

October 28, 201610:00 am454 views

Singapore’s Sembcorp Marine Ltd swung to a loss in the third quarter and the rig builder’s revenue was hurt by customers deferring rig deliveries amid a protracted downturn in the oil and natural gas market.

Chief executive Wong Weng Sun also said that the firm had “terminated less efficient sub-contractors and allowed for natural attrition of our employees”, resulting in a reduction of about 8,000, The Straits Times reported.

The company posted a net loss of S$21.8 million for the three months ended Sept. 30, compared with a net profit of S$32.1 million a year ago. It said the bottomline was hurt by higher financing costs, share of losses from associates and foreign exchange impact.

The company, majority-owned by industrial conglomerate Sembcorp Industries Ltd, said revenue dropped 21 per cent.

Sembcorp Marine’s net order stood at S$8.4 billion. Excluding the orders for drillships from rig leaser Sete Brasil, which has filed for bankruptcy protection, the order book was worth S$5.2 billion.

The rig builder said several rigs due for delivery have been deferred. “We have taken steps to protect our interests and are evaluating other courses of action, including sale to third parties,” it added.

Singapore’s offshore and marine industry has been pummelled as clients cut spending to weather the slide in oil prices, hurting Sembcorp Marine and bigger rival Keppel Corp, as well the shipbuilding and offshore support firms that operate out of hub Singapore.

Several companies, including Swissco Holdings and shipping trust Rickmers Maritime, are facing strain in meeting their debt commitments and are trying to restructure their bonds. Oilfield services firm Swiber Holdings was placed under judicial management earlier this month.

Perisai Petroleum Teknologi Bhd, a Sembcorp Marine customer, declared insolvency this month.

In a separate statement on Tuesday, shipbuilder COSCO Corp (Singapore) Ltd said it expected to report a bigger third-quarter net loss due to cancellations of several orders and delivery extensions in many offshore projects. The company is scheduled to report results on Nov. 11.

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