SembCorp Marine Ltd’s Latest Earnings: 4 Key Management Quotes Investors Shouldn’t Miss

SembCorp Marine Ltd (SGX: S51) continues to struggle with lower sales and lower profits.

In its latest quarter, SembCorp Marine’s revenue shrank by 27.8% while profits plunged by over 65%. Wong Weng Sun, Chief Executive of SembCorp Marine, covered a myriad of different topics during the firm’s earnings briefing. Here are four quick quotes investors might not want to miss:

Stabilised, but no recovery in sight

Overall, Wong said that oil prices remained volatile amid a supply overhang:

“Operating conditions in the offshore and marine sector continue to be challenging. Oil prices remain volatile, hovering between the US$45 to US$50 per barrel range, as the supply glut remains despite OPEC-led production cuts.”

There is some good news: day rates for drilling rigs had stabilised while utilisation rates have improved. However, he noted that the recovery has not been robust:

“While offshore day rates for drilling rigs appear to have stabilized and utilization levels have begun to improve, a more robust recovery will take longer.”

Adjusting to a new reality

SembCorp Marine has been focusing on keeping its workforce lean, and nimble to adjust to its new environment. The approach is two-fold. For one, the oil and gas firm is moving its resources to non-drilling work.

“Amidst the protracted downturn, the Company is focused on staying lean and nimble through effective resource and cost management.

To this end, we have been optimising our workforce and redeploying employees from drilling to non-drilling work.”

Beyond that, SembCorp Marine has also moved to reduce excess manpower through natural attrition, non-renewal and early termination of service contracts. Wages for senior management was also cut. Wong said:  

“For 2017, the wage freeze will be carried out across the board for all employees, and a 10% monthly variable component wage cut has been implemented for senior management staff across the Group.”

For the moment, there doesn’t appear to be signs of recovery at SembCorp Marine. The best it can do right now could be to keep its costs low, and weather the storm.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.