SembCorp Marine Ltd’s Latest Earnings: 7 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 seven quick quotes investors might not want to miss (for the first four, head here):

Show me the money

Wong said that SembCorp Marine is exercising discipline in conserving cash. This behaviour extends to its customer contracts. He reported:  

“The majority of our order book contracts continue to be on progress payment terms to minimise our need for significant working capital. ”

At the end of 30 June 2017, SembCorp Marine had a net order book of $3.6 billion. Wong also said that the firm will see lower capital expenditure this year. SembCorp Marine will also be deferring non-essential capital expenditure. He explained:

“We expect capex to continue to trend lower as most of our yard capex have been expended.

Going forward, we will only proceed with yard capex that are needed for execution of our secured contracts or which will realise cost-savings, while deferring non-essential capex.”

SembCorp Marine had $1.01 billion in cash and equivalents and $4.39 billion in borrowings, as of 30 June 2017. Wong added that its net debt to equity was 1.31 times.

The Money Quote

More importantly, Wong believes that SembCorp Marine has the support from its bankers and bondholders to take on debt, should the need arise. He is confident that the firm will have the financial resources to execute its order book:   

“We believe our debt headroom is sufficient and are confident we will be able to execute our orders and meet our liquidity needs with our existing facilities and continued support of our bankers and bondholders.”

In all, there appears to be some reasons to be optimistic, but the challenges still remain. We will have to check in the next quarter for another look.  

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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.