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This is how Sembcorp plans to survive the painful O&M downturn
Sete Brasil is still a key overhang.
Cost-cutting is Sembcorp's weapon of choice when it comes to countering the current down-cycle in the offshore and marine industry, according to group president and chief executive officer Tang Kin Fei.
Speaking in an interview released along with the group's annual report, Tang recognised the challenges that its marine business is facing but reiterated that it will be able to survive the downturn.
"It has been a very challenging time for the Marine business. Our Marine business has been affected by uncertainties in Brazil, as well as by the financial difficulties of its customer Sete Brasil. In response, the business has adopted a prudent, conservative approach. Operationally, it will continue to maintain a focus on delivering projects on its orderbook in a timely and efficient manner, while keeping a tight rein on working capital and costs," he said.
Tang also pinned his hopes on SembMarine's diversified product offering, which he said will enhance the group's long-term resilience.
"The business has built up a full spectrum of solutions and proprietary technologies as well as modern infrastructure to serve not only oil and gas exploration players, but also downstream players in the production, offshore support and export and import facilities segments," he said.
When it comes to the group's other business segments, Tang highlighted that Sembcorp will continue the overseas expansion of its utilities business in the foreseeable future.
"Our overseas growth strategy is on track. In 2015, our overseas business performed well, contributing close to 80% of our Utilities net profit, or 60% of Utilities’ net profit excluding corporate costs and significant items. Going forward, we expect it to grow even further," he said.
He noted that the group is particularly focused on its operations in India and China, as well as emerging regional markets including Myanmar, Vietnam, Indonesia and Bangladesh.
"The macroeconomics in these markets drive demand for our solutions with population growth, industrialisation and urbanisation. Trends such as increased infrastructure development, as well as greater emphasis on renewable energy and water stress and scarcity also create opportunities for us in these regions,” he said.
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