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Pay cuts at Sembmarine as yard shutdowns bring H1 net loss to S$192 million
SEMBCORP Marine (Sembmarine) has posted a net loss of S$192.1 million in the half-year ended June 30, due to the shutdown of production activities at all its Singapore yards since April as a result of the Covid-19 pandemic.
By comparison, the group made a net loss of S$6.8 million in the same period the year before. Revenue in the first half was S$906 million, down 41 per cent from the same period a year earlier.
All segments posted losses in the six-month period, with the exception of the repairs-and-upgrades business, which reported higher profits on better product mix of higher-margin upgrade projects executed in the first quarter of 2020.
Sembmarine president and chief executive Wong Weng Sun told an earnings call on Wednesday: " We had positioned ourselves for recovery in 2020, but we were unexpectedly hit by Covid-19 and the collapse of oil prices.
" Given the delays in executing our existing projects, and with new orders likely to remain depressed in 2020, the group now foresees that recovery will be pushed out to 2021 and beyond."
The net order book was S$1.91 billion as at end-June, down from S$2.4 billion as at end-2019. " While we have yet to announce significant new orders this year, we have resumed discussions on several project opportunities," Mr Wong said.
With the relaxation of Covid-19 measures in Singapore in June, production activities gradually resumed from early this month, but Sembmarine continues to right-size its workforce.
Mr Wong has volunteered to take a 50 per cent pay cut. Senior management will take a 15 per cent salary reduction middle management will take 10 per cent less. All other employees in Singapore and overseas will take a 5 per cent pay cut, except for those earning under S$1,800 a month. Sembmarine' s board is also continuing with a 10 per cent reduction in director&rsquo s fees this year, similar to FY2019.
All non-essential capital expenditures have been deferred. Capex in the first half of 2020 was S$58 million, less than a third of the amount incurred in the first half of 2019. Mr Wong said: " Going forward, we expect capex to remain low, as only maintenance capex will be incurred to ensure the safety and operability of our yard facilities."
Sembmarine remained in a net current liabilities position of S$259 million as at June 30, due mainly to term loans maturing over the next 12 months. The group said it is engaging with its lenders to refinance these loans with longer term maturities.
Mr Wong said: " In June 2020, we completed the refinancing of three term loans due that month, with longer term maturities. The group expects to have adequate existing loan facilities to repay or refinance current borrowings as they fall due."
With no operating activities for almost three months in the first half of 2020, cash flow from operations was a negative S$122 million, compared with a positive S$273 million in the corresponding period the year before.
Net gearing was 1.35 times as at end-June, compared to 1.14 times at end-2019.
On June 8, Sembmarine announced a proposed S$2.1 billion renounceable underwritten rights issue, followed by a proposed demerger ofSembmarine from its parent, Sembcorp Industries (SCI), via a distribution in specie of Sembmarine shares owned by SCI to SCI&rsquo s shareholders.
Mr Wong urged shareholders to support the rights issue when it is put to a vote in August: " The proposed rights issue, when completed, will strengthen our balance sheet by converting our S$1.5 billion subordinated loan from SCI into equity on our balance sheet.
" This will lower our net gearing as at end-2019 from 1.82 times to 0.45 times on a pro forma basis, and significantly reduce our interest expense. We will also raise approximately S$0.6 billion additional cash to fund our working capital needs and other general corporate purposes, enabling us to compete for high-value new orders and overall ensure our long-term viability."
First-half loss per share was 9.19 Singapore cents, widening from a loss per share of 0.33 Singapore cent in the first half of 2019.
Net asset value per share was 94.77 Singapore cents as at June 30, 2020, down from 103.96 Singapore cents as at Dec 31, 2019.
Those that remained in SCM today probably are pro rights buyers
sembmarine has found its bottom after result within expectations
U discover something? TA_Expert has been missing for quite sometime and suddenly this new account " better" suddenly appears :) Sounds like TA_Expert
SgTrader17 ( Date: 16-Jul-2020 02:25) Posted:
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Your account is a new one.. And TA_Expert has being missing... Are u TA_Expert in disguise :)
better ( Date: 16-Jul-2020 01:58) Posted:
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u must be dreaming :)
ruanlai ( Date: 16-Jul-2020 02:48) Posted:
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SCM will be open free fall to below 30cents........4896
SCI will also get drag down below $1.60 on pre-open....9696
SCI will also get drag down below $1.60 on pre-open....9696
There are real shareholders around that are anxious about their investment in SCM, which is a company that incurred three years of losses (not just one or two quarters), with outstanding debt of .... $4b. This of course includes the $1.5b that was loan from SCI. Er ... When you mentioned you owed 990 lots of SCM, means you probably spent more than $500k on SCM investment and with current losses and no improvement to its debt on its financial statement, you probably will veto and then sleep with worthless SCM shares after that. I am kind of thinking you must either be a multi-millionaire, at least, to be ready for that to happen. Or you can come out with a proposal to the CEO about how to restructure the $4b debt so that other companies will have confidence in SCM and give more contracts for the company going forward, so that it can turn losses into profits? And since your veto, means also without the backing of Temasek, of course. Not sure should I address you as a shareholder or .... A joker. Lost of words at your whole analysis. Probably the best one that I have read till date. Dyodd (for the REAL shareholders). You decide you want $$ going forward or toilet papers worth less than 20 cents after that EGM. Good luck and take care.
Just went through SMM' s 1H 2020 results and financial statements. It is unspoken that the CEO needs to openly support the rights issue because
1) SCI controls SMM' s board and decides whether he gets to keep his CEO post. So, Obviously, he has to do their bidding.
2) The additional cash injection will make his job a breeze and he can reinstate his salary earlier and pay himself and management good bonuses sooner rather than later.
Facts are
1) the " losses" are due to accelerated depreciation of a yard value in Q1 and delayed revenue recognition in Q2. Like most companies, this is the kitchen sink quarter when the management will try to throw all they have got at it so they can report " improved" numbers in subsequent quarters. Basically, creative accounting, for those who understand what it means.
2) Cash on hand has increased from $780mil a year ago to the current $1.1billion. Or from S389mil a quarter ago to $1.1billion currently. Bottomline is, SMM is flooded with cash. More government cash handouts from job credit scheme and foreign worker levies etc. on the way
3) It is mentioned in the report that they should have no problem rolling over existing debt that is coming due. In their own words- " In June 2020, we completed the refinancing of three term loans due that month, with longer term maturities. The Group expects to have adequate existing loan facilities to repay or refinance current borrowings as they fall due."
4) SMM seems to be making good progress in scheduling windmill projects, the next growth frontier, to supplmentary its traditional business lines.
In conclusion, SMM does not need the right issues to survive or thrive. The rights issue is for SCI to get off the hooks, with Temasek' s support, at the expense of SMM' s minority shareholders. So again, the only logical choice for SMM' s minority shareholders is to veto the whitewash.
Disclaimer: I am an interested party with 990 lots of SMM shares.
1) SCI controls SMM' s board and decides whether he gets to keep his CEO post. So, Obviously, he has to do their bidding.
2) The additional cash injection will make his job a breeze and he can reinstate his salary earlier and pay himself and management good bonuses sooner rather than later.
Facts are
1) the " losses" are due to accelerated depreciation of a yard value in Q1 and delayed revenue recognition in Q2. Like most companies, this is the kitchen sink quarter when the management will try to throw all they have got at it so they can report " improved" numbers in subsequent quarters. Basically, creative accounting, for those who understand what it means.
2) Cash on hand has increased from $780mil a year ago to the current $1.1billion. Or from S389mil a quarter ago to $1.1billion currently. Bottomline is, SMM is flooded with cash. More government cash handouts from job credit scheme and foreign worker levies etc. on the way
3) It is mentioned in the report that they should have no problem rolling over existing debt that is coming due. In their own words- " In June 2020, we completed the refinancing of three term loans due that month, with longer term maturities. The Group expects to have adequate existing loan facilities to repay or refinance current borrowings as they fall due."
4) SMM seems to be making good progress in scheduling windmill projects, the next growth frontier, to supplmentary its traditional business lines.
In conclusion, SMM does not need the right issues to survive or thrive. The rights issue is for SCI to get off the hooks, with Temasek' s support, at the expense of SMM' s minority shareholders. So again, the only logical choice for SMM' s minority shareholders is to veto the whitewash.
Disclaimer: I am an interested party with 990 lots of SMM shares.
I understand that TA (Expert!) wants to veto the rights issue cum demerger, as he thinks that his SCM shares are worth more than current price and that Temasek will offer him a bigger price for his SCM shares. Let's see him do the impossible at the coming EGM and then .... Bury his SCM shares with him under his pillow crying when the value drops below 20 cents after his veto. God bless the EXPERT.
Shareholders want to see price at least stabilise if not go up to vote & support. I bought again to average at 0.70+ that day price shot up before halt & the stupid plan caused it to plunge the next day. No merger news.
randommonkey ( Date: 15-Jul-2020 21:36) Posted:
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SCI will rangebound 1.75-1.85 for the next 1 mth.. until mid of august when they annouce the EGM date and the prospectus mailed out to shareholders.
Then as u mentioned, they will try to push semb marine share price closer to the TERP in order to encourage shareholders to vote yes.
One weapon they will definitely use will be the huge loss annouced today. They will use the huge loss to highlight to semb marine shareholders the urgency of getting support and $$$ from Temasek :) This factor alone would encourage most shareholders to vote for the deal :)
They dun want to end up like Hyflux .. better let Temasek help when Temasek volunteers to help..
Then as u mentioned, they will try to push semb marine share price closer to the TERP in order to encourage shareholders to vote yes.
One weapon they will definitely use will be the huge loss annouced today. They will use the huge loss to highlight to semb marine shareholders the urgency of getting support and $$$ from Temasek :) This factor alone would encourage most shareholders to vote for the deal :)
They dun want to end up like Hyflux .. better let Temasek help when Temasek volunteers to help..
randommonkey ( Date: 15-Jul-2020 21:36) Posted:
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Rig building and FPSO coversion are still their main offshore core businesses.
Sgvale ( Date: 15-Jul-2020 21:23) Posted:
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i honestly doubt ahgong would save the price now. probably might save it closer to the date.
reason being very simple - anyone buying at this point in time WILL vote in favour of rights and white wash. those that will not vote in favour would probably have sold. they probably push up closer to TERP closer to date to incentivise more people to subscribe the rights. SCI + SMM duo share holders will also vote in favour of the demerger.
anyway disclaimer, i am vested at SCI, fomo-ed and bought at the high after the demerger news broke, will continue averaging down SCI if price continue dropping.
reason being very simple - anyone buying at this point in time WILL vote in favour of rights and white wash. those that will not vote in favour would probably have sold. they probably push up closer to TERP closer to date to incentivise more people to subscribe the rights. SCI + SMM duo share holders will also vote in favour of the demerger.
anyway disclaimer, i am vested at SCI, fomo-ed and bought at the high after the demerger news broke, will continue averaging down SCI if price continue dropping.
Sgvale ( Date: 15-Jul-2020 21:32) Posted:
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Just hope Ah Gong save the price from falling further tomorrow first to show their sincerity..almost to abyss aleady with the stupid news.
josemmm123 ( Date: 15-Jul-2020 21:18) Posted:
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that why semb marine shareholders accept ah gong help la... at least stay alive still got chance... 留得青山在不怕没柴烧..
Sgvale ( Date: 15-Jul-2020 21:26) Posted:
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think becos PUB has the power to take back hyflux water treatment facilities so no need to rescue... Why spend $$$ when u can get it for free? :)
So Temasek offer to help Semb marine, shareholders should not let the chance slip man.. if not temasek may not come back again with help then Semb marine will end up like Hyflux.. regret too late liao..
So Temasek offer to help Semb marine, shareholders should not let the chance slip man.. if not temasek may not come back again with help then Semb marine will end up like Hyflux.. regret too late liao..
randommonkey ( Date: 15-Jul-2020 21:23) Posted:
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Ah Gong want to save SCI's baggage. So must save SCM. Like Love thy neighbours lor.....
randommonkey ( Date: 15-Jul-2020 21:23) Posted:
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Co.says turning the SCM Into what wind green energy. In future, different business w Keppel Rig business. Got synergy to merge meh?
actually why ahgong dw to save hyflux ah?
josemmm123 ( Date: 15-Jul-2020 21:20) Posted:
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