SIMIC

Marcus Hand | Jul 12, 2021

Sembmarine has been hit by labour shortages and supply chain constraints, which have delayed projects and increased costs.

In a profit guidance statement ahead of its first half results for 2021 said it would be making full provisions in its H1 results for cost increases to complete ongoing projects in this financial year.

Related: Sembcorp Marine hit by labour shortage due to Covid border controls

“Since the onset of the Covid-19 pandemic in 1Q2020, the majority of the Group’s projects have been delayed by at least 12 months,” the company said.

The outbreak of the Delta variant in the Indian sub-continent has effectively closed off the traditional labour supply markets used by Singapore yards. Sembmarine said it had been trying  to recruit skilled labour from non-traditional markets, however, costs are more than double its traditional markets. It is making for additional manpower costs over the next six to 18 months.

“Arising from the delays in project execution, the Group also expects to incur additional costs due to work re-scheduling, extra sub-contract work, additional material usage and other staff turnover related costs,” it added. Sembmarine is also making provisions for these additional costs over the next six to 18 months.

Singapore-listed Sembmarine expects its H1 2021 loss to be in the range of its SGD582m ($440m) 2020 full year loss.

Sembmarine is currently in talks with Keppel Offshore & Marine about a merger of the marine businesses.