Sembcorp Marine (SembMarine) announced, on July 12, that it expects to report losses in the 1HFY2021 ended June, which is likely to be “in the region of” the full-year losses incurred in the FY2020 ended December.
This is due to the provisions undertaken by the group for the increased costs to complete the group’s ongoing projects in the FY2021 and FY2022 that were incurred in the 1HFY2021.
The provisions for additional costs include the hiring of additional skilled labour from non-traditional sources to complete its projects with as little delays as possible due to the Covid-19 pandemic.
The pandemic, which begun in the 1QFY2020, has caused most of the group’s projects to be delayed by at least 12 months.
According to the group, recruitment from non-traditional sources costs more than twice of that compared to the hires from traditional sources due to higher wages and costly upfront Covid-19 related costs.
The group says it will make provisions in the 1HFY2021 for these “significant additional” manpower costs to be incurred over the next six to 18 months.
In addition, SembMarine expects to incur additional costs due to work rescheduling, extra sub-contract work, additional material usage and other staff turnover related costs.
Provisions will be made for these costs over the next six to 18 months as well.
SembMarine will be releasing its 1HFY2021 results on July 29.
Shares in SembMarine closed 0.1 cent higher or 0.8% up at 12.3 cents on July 9.
