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In 1Q2022, Sembcorp Marine's cash flow, cash position and liquidity management improve as gearing drops

·2-min read

Sembcorp Marine reports lower gearing of 0.38x as at end 1Q2022, with cash flow, cash position and liquidity showing improvement

In a business update, Sembcorp Marine (SCM) announced that its cash flow and liquidity management have improved following the completion and successful deliveries of several projects in 1Q2022. As a result, the Group’s net debt/equity ratio has improved to 0.38 times at end 1Q2022 from 0.49 times at end 4Q2021.

Since the FY2021 results update, there has been no further disbursement of the proceeds from the September 2021 $1.5 billion Rights Issue. The balance of the net proceeds remains at approximately $720 million to be used for general corporate purposes, including working capital. The Group expects to have the necessary liquidity to fund its operations for the foreseeable future.

As at end-1Q2022, SCM has a net order book of $1.75 billion. This consists of $1.51 billion of projects under execution (with a total original contract sum of $5.45 billion) and $0.24 billion of ongoing Repairs & Upgrades projects. Renewables and cleaner/green solutions comprise approximately 65% of the Group’s net order book.

In March 2022, Sembcorp Marine secured a landmark contract from Maersk for the construction of a WTIV. The WTIV brings breakthrough design to the wind market with the vessel designed to operate at a high level of efficiency and to handle the next generation of larger wind turbines.

Negotiations are ongoing with the Brazilian Navy on the construction of the Antarctic Support Vessel “NapAnt”, a Brazil Navy Research Vessel Project, with a contract award expected in 2Q2022.

SCM also secured multiple contracts for major repairs and upgrades, including three US navy vessels; damage work on Samjohn Vision for John Samonas & Sons Ltd (UK); fabrication work on barge vessel Magnetic Barge IV for Australian owner Cape Preston; and repair on Polar Endeavour and Polar Adventure for FCC partner ConocoPhillip.

Elsewhere, the Group also won a block booking of nine Maersk container vessels for repairs, with several requiring installation of Ballast Water Treatment Systems.

With rising oil prices, SCM is actively working on several tender opportunities in the O&M segment, as well as enquiries for offshore vessels upgrading projects. In addition, the Group is also actively pursuing multiple tender opportunities in the offshore renewables and new energy segments as the industry continues to see improving prospects with the global transition towards cleaner energy and sustainable solutions.

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