Sembcorp Marine posts loss as oil slump delays offshore projects

SINGAPORE: Sembcorp Marine Ltd, the world’s second-largest oil rig builder, reported a loss in the third quarter as an industry slump led to delivery delays for offshore projects.

Net loss in the three months through September was S$21.8mil (US$16mil) because of higher finance costs and losses from associates and joint ventures, the Singapore-based company said in an exchange filing.

That compares with a S$32.1mil net income a year ago. Sales dropped 21% to S$888mil.

Sembcorp Marine is among shipyards in the region hurt by a rut following a drop in crude oil prices, which forced explorers and other energy companies to slash spending and delay or cancel projects.

Some of the measures the company took resulted in the elimination of about 8,000 jobs. Bigger rival Keppel Corp. said last week that its offshore unit reduced about 8,000 of its workforce in the first nine months of this year. “The outlook of the oil and gas sector is uncertain and recovery is expected to be long drawn,” Sembcorp said in a statement.

Shares of Sembcorp Marine slipped 1.1% to S$1.315 in Singapore yesterday before the earnings announcement. The stock has fallen 25% this year, compared with a 1% decline in the Straits Times Index. These are the highlights: > Re-allocated excess manpower; terminated less efficient subcontract workers and allowed natural attrition of employees; Brazil yard has taken steps to reduce manpower

> Implemented salary freeze and adjustments to variable remuneration for management since 2015 to reduce operating costs

> New yard capex will only proceed if required for execution of secured contracts; non essential capex deferred.