Sembcorp Marine (SembMarine) “expects losses to continue” for the rest of the year given the continued impact of Covid-19, according to its 1QFY2021 ended March business update.
In the May 3 update, the group notes that supply chain constraints and a shortage of skilled workers continue to be a challenge, as ongoing border controls prevent foreign workers from countries such as India and Bangladesh from returning to Singapore.
In addition, competition for foreign labour has also increased given the recovery of the Singapore economy.
To that end, the group says that the completion of some of its projects has been impacted while it sources skilled workers from other countries.
On its renewable energy sector, SembMarine highlights the contract it jointly secured with GE Renewable Energy’s Grid Solutions during the quarter for a high voltage direct current (HVDC) electrical transmission system for the Sofia Offshore Wind Farm. The HVDC system represents Sofia’s second-largest contract and is worth approximately GBP600 million ($1.12 billion).
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SembMarine is also currently fabricating 15 jacket foundations for the Formosa 2 Offshore Wind Farm located in Taiwan. The 376-megawatt facility will be Taiwan’s largest offshore wind farm, generating electricity for over 380,000 households.
The group has an existing order book of over $1.89 billion, including $0.29 billion of ongoing repairs and upgrades for delivery in 2021. The group says it secured "multiple contracts" for repairs and upgrades, including a long-term contract with a European owner and operator of luxury cruise ships and yachts.
On future orders, the group says that competition for new projects remains intense as market sentiment improves. SembMarine is tendering for more than 10 projects, predominantly within the renewable energy and gas solutions segment.
Looking ahead, the group anticipates that the tightening of Covid-19 measures and border controls in recent weeks could further impact the workforce supply and thus the group’s activities. Resolving the worker shortage remains a “key priority” to prevent the risk of project delays or terminations.
Current and future restrictions on travel and transportation could also disrupt global supply chains.
Nonetheless, the group notes that its strategic investments have positioned it for a transition towards cleaner energy sources and a low-carbon economy.
Shares in SembMarine closed 0.5 cents or 2.33% lower at 21 cents on April 30.
