Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — Sembcorp Marine — H1 2020 Earnings Presentation
62 slides from Singapore Exchange's earnings presentation, 2020
Slide 1: Corporate Presentation: 1H 2020 Results Briefing
CORPORATE PRESENTATION 1H 2020 Results Briefing Aerial view of Tuas Boulevard Yard Phase I and II 1 Aerial view of Phase I of Sembcorp Marine Tuas Boulevard Yard
Slide 2: Agenda
Agenda • President & CEO Address (please refer to separate CEO speech text for details) • Group Finance Director Address • Question and Answer session
Slide 3: Impact of COVID-19 & Oil Price Collapse
Impact of COVID-19 & Oil Price Collapse ❖ Global economies severely affected by COVID-19 as containment measures disrupt travel, transport and global supply chains. ❖ Reduction in oil & energy demand contributed to the collapse in oil prices in March 2020. ❖ Oil producers continue to defer final inv
Slide 4: Immediate Priority & Focus
Immediate Priority & Focus Sembcorp Marine’s (SCM) immediate priority and focus: ▪ To address urgent liquidity needs to fund operations and ride out the protracted downturn. ❖ SCM had positioned for recovery in 2020 but was unexpectedly hit by COVID- 19 and the collapse of oil prices which deepened
Slide 5: Financial Performance
Financial Performance Financial Performance - Revenue ($m) 1,800 ❖ In 1H 2020, the Group generated revenue of 1,600 1,542 $906 million – 41% lower than $1.54 billion 1,400 1,200 in 1H2019, due to the stand down of 1,000 906 production activities since April 2020. 800 600 ❖ Net loss for 1H 2020 was $
Slide 6: Projects in Progress
Projects in Progress 6 Projects Under Execution as at 30 June 2020 Gross orderbook of existing contracts is $6.5 Renewables Solutions billion. Net order book as at end June 2020 • Hornsea 2 Offshore Wind Farm - Jacket Foundations and Topsides stood at $1.91 billion. • Formosa 2 Offshore Wind Farm –
Slide 7: Gradual resumption of Work Activities
Gradual resumption of Work Activities ❖ With the relaxation of COVID-19 measures in Singapore since June 2020, Sembcorp Marine has gradually resumed yard operations. ❖ SCM working closely with customers to restart the execution of existing projects. ❖ To date, there has been no cancellation of any e
Slide 8: Gradual resumption of Work Activities
Gradual resumption of Work Activities ❖ RWE Renewables, owner of the 1.4 gigawatt (GW) Sofia Offshore Wind Farm in the UK North Sea (“Project”), selected Sembcorp Marine and GE’s Grid Solutions as the preferred supplier for the Wind Farm’s High Voltage Direct Current (HVDC) electrical transmission s
Slide 9: Renewables Solutions: Hornsea Offshore Wind Farm Project
Projects Under Execution: Renewables Solutions Hornsea 2 Offshore Wind Farm Project – Ørsted Engineering, Procurement, Construction, Hook-up & Commissioning of Two Offshore Wind Farm Topsides and Fabrication of Jacket Foundations Project: Engineering, procurement, construction, hook-up and commissio
Slide 10: Renewables Solutions: Formosa Offshore Wind Farm Project
Projects Under Execution: Renewables Solutions Formosa 2 Offshore Wind Farm Project – Jan De Nul Fabrication of 15 Jacket Foundations Project: Fabrication of 15 jacket foundations for the Formosa Phase 2 Offshore Wind Farm. Secured the design and build Customer: Jan De Nul n.v. contract for the dual
Slide 11: Process Solutions: Johan Castberg Project
Projects Under Execution: Process Solutions Johan Castberg Project – Equinor Turnkey Engineering, Procurement and Construction of Newbuild FPSO Hull and Living Quarters Project: Turnkey engineering, procurement and construction of newbuild FPSO hull and living quarters Customer: Equinor (formerly St
Slide 12: Process Solutions: TechnipFMC Karish FPSO
Projects Under Execution: Process Solutions TechnipFMC Karish FPSO EPC construction & integration of FPSO hull, living quarters & topside modules Project: EPC construction and integration of a newbuild FPSO hull, living quarters and topside modules, including owner-furnished equipment Customer: Tech
Slide 13: Process Solutions: Shell Vito FPU
Projects Under Execution: Process Solutions Shell Vito FPU Construction and Integration of FPU Hull, Topsides and Living Quarters Project: Construction and integration of hull, topsides and living quarters for Shell’s Vito semi-submersible Floating Production Unit (FPU), including installation of ow
Slide 14: Process Solutions: Shell Whale FPU
Projects Under Execution: Process Solutions Shell Whale FPU Construction and Integration of FPU Hull, Topsides and Living Quarters Project: Construction and integration of hull, topsides and living quarters for Shell’s Whale semi-submersible Floating Production Unit (FPU), including installation of
Slide 15: Process Solutions: Gallaf Batch 2 Well Head Platforms
Projects Under Execution: Process Solutions Gallaf Batch 2 Well Head Platforms Engineering, procurement, construction, installation, commissioning and offshore brownfield integration of two well head platforms and bridges Project: Engineering, procurement, construction, installation, commissioning a
Slide 16: Process Solutions: FPSO Conversion of VLCC Ariake
Projects Under Execution: Process Solutions FPSO Conversion of VLCC Ariake FPSO conversion project with Shapoorji Pallonji and Bumi Armada Project: FPSO conversion of VLCC Ariake, including hull repairs and upgrading as well as fabrication of three topside modules Customer: Joint venture companies o
Slide 17: Process Solutions: P-71 FPSO Project
Projects Under Execution: Process Solutions P-71 FPSO Project Fabrication of topside modules and integration works of newbuild FPSO hull To be advised by EJA Project: Fabrication of topside modules and integration works for newbuild FPSO hull Customer: Tupi B.V. Operation: Offshore Brazil 17
Slide 18: Gas Solutions: LNG Bunker Vessel Newbuild
Projects Under Execution: Gas Solutions LNG Bunker Vessel Newbuild Design and Construction of 12,000 cbm LNG bunker vessel • Project: Design and construction of 12,000 cbm dual-fuel LNG bunker vessel with GTT Mark III Flex membrane tank system; to be the biggest vessel of its kind built in Singapore
Slide 19: Gas Solutions: Tyra offshore platforms and bridges
Projects Under Execution: Gas Solutions Tyra offshore platforms and bridges Fabrication of platforms and bridges for Total E&P Danmark AS • Project: Fabrication of platforms and bridges for the Tyra Redevelopment Project • Customer: Total E&P Danmark AS • Location: Tyra field, Danish sector of the N
Slide 20: Ocean Living Solutions: Norled Ropax Ferries Project
Projects Under Execution: Ocean Living Solutions Norled Ropax Ferries Project Design and Construction of 3 Battery-powered Proprietary-designed Roll-on Roll-off Passenger (Ropax) Ferries Project: Design and construction of three battery-powered ropax ferries based on a proprietary design by Sembcorp
Slide 21: Advanced Drilling Rig Solutions: Transocean Drill Ships
Projects Under Execution: Advanced Drilling Rig Solutions Transocean Drill Ships Construction of Two Proprietary Design High-Specification Drill Ships Project: Construction of two high-specification ultra-deepwater drill ships for Transocean based on Sembcorp Marine’s proprietary Jurong Espadon III
Slide 22: Gas Solutions: Major FSRU and FSU Upgrade
Projects Under Execution: Gas Solutions Major FSRU and FSU Upgrade Upgrade of Major Floating Storage & Regasification Units (FSRU) and Floating Storage Units (FSU): • FSRU – Karmol LNGT Powership Africa • FSRU – Karmol LNGT Powership Asia • FSU – Torman II FSRU upgrading of KARMOL LNGT Powership Asi
Slide 23: Higher value work at Repairs & Upgrades
Higher value work at Repairs & Upgrades 1H 2020 Repairs & Upgrades – Diverse Marine & Offshore Projects Tuas Boulevard Yard Crude oil tanker overhauls Offshore rig repairs Admiralty Yard Vehicle carrier repairs Containership refits Gas carrier scrubber works Tanker scrubber works
Slide 24: Higher value work at Repairs & Upgrades: LNG Repairs
Higher value work at Repairs & Upgrades 1H 2020 Repairs & Upgrades – LNG Repairs Multiple LNG vessels calling at Admiralty Yard for repairs and upgrades LNG carriers from GasLog LNG Services – Methane Julia Louise, GasLog Saratoga and GasLog Salem
Slide 25: Higher value work at Repairs & Upgrades: Cruise Ships
Higher value work at Repairs & Upgrades 1H 2020 Repairs & Upgrades – Cruise Ships Pacific Explorer from P&O Australia Asuka II, Japan’s largest cruise ship, from NYK Cruises Genting Dream from Dream Cruises Crystal Dream Westerdam fromfrom Crystal Holland Cruises America Line Majestic Princess from
Slide 26: Successful Makeover of Asuka II Cruise Ship
Higher value work at Repairs & Upgrades 1H 2020 Repairs & Upgrades Successful Makeover of Asuka II Cruise Ship Commemorating the successful makeover of NYK Cruises’ Asuka II – Japan’s largest cruise ship – involving extensive refurbishment and scrubber installation
Slide 27: Right-sizing and Cost Optimisation
Right-sizing and Cost Optimisation ❖ Sembcorp Marine continues to manage resources with added prudence and discipline during this difficult period. ❖ Workforce right-sizing is on-going and moving in tandem with work activities and project load. ❖ Salary reduction of management and staff has been imp
Slide 28: Cashflow & Liquidity Management
Cashflow & Liquidity Management ❖ Group CAPEX for 1H2020 was about $58 million, which is less than a third of the amount incurred in 1H2019. ❖ CAPEX expected to continue to be low , only maintenance CAPEX will be incurred to ensure the safety and operability of yard facilities. ❖ With no operating a
Slide 29: Proposed Rights Issue & Demerger
Proposed Rights Issue & Demerger ❖ Urgent need to recapitalise to meet immediate and foreseeable liquidity requirements, and strengthen balance sheet. ❖ Sembcorp Marine’s Board and Management considered various financing options and believe that the $2.1 billion Equity Rights Issue (“Rights Issue”)
Slide 30: Proposed Rights Issue & Demerger
Proposed Rights Issue & Demerger ❖ Demerger of Sembcorp Marine from SCI via Distribution in Specie - Sembcorp Marine and SCI to be two separate entities through proposed distribution of Sembcorp Marine shares owned by SCI to SCI shareholders (“SCI Distribution”). ❖ Demerger to allow Sembcorp Marine
Slide 31: Key Business Strategies
Key Business Strategies To sustain its business and successfully compete in the global arena for new opportunities, Sembcorp Marine has implemented three key strategies: ➢ Proactive diversification and expansion into new and existing markets; ➢ Strategic strengthening of yard capabilities; and ➢ Inn
Slide 32: Proactive Diversification and Expansion
Proactive Diversification and Expansion o Proactively diversified into clean energy segments – leverage SCM integrated offshore and marine engineering capabilities to provide full value chain of offshore wind and offshore gas solutions. o Key example - Construction of two substation platform topside
Slide 33: Proactive Diversification and Expansion
Proactive Diversification and Expansion o Other than Gas and Renewables, SCM’s market focus and new products and solutions targeted at the following segments: • Process Solutions, including for offshore oil and gas production; • Advanced Drilling Rigs; • Ocean Living, including ferries, cruise ships
Slide 34: Strengthening Yard Operations
Strengthening Yard Operations o At flagship Tuas Boulevard Yard (TBY), a new pair of gantry cranes with 30,000-tonne lifting capacity will boost SCM reputation as a one-stop production centre capable of fabricating, assembling and installing larger and heavier integrated structures with greater cost
Slide 35: Innovation Development
Innovation Development o Selective acquisition of IP (intellectual property) technologies and engineering talent – to provide access to innovative designs for specialised vessels and other green products and solutions. o Long-term investments in research and development and disruptive technologies -
Slide 36: Seatrade Maritime Sustainability Award
Seatrade Maritime Sustainability Award ❖ Sembcorp Marine won the Sustainability Award at this year’s Seatrade Maritime Awards Asia, in recognition of efforts to incorporate Sustainability in every aspect of our business operations. ❖ Among various initiatives last year, Sembcorp Marine invested $4.7
Slide 37: Looking Ahead
Looking Ahead ❖ Sembcorp Marine is gradually resuming project executions safely and progressively. How soon the Group’s workforce will be allowed to return to full strength will determine the business outlook in subsequent quarters. ❖ Sembcorp Marine will work to ensure adequate liquidity and financ
Slide 38: Looking Ahead
Looking Ahead ❖ We are now resuming our project executions safely and progressively. ❖ In this difficult business environment, Sembcorp Marine expects its losses to continue into the foreseeable quarters. ❖ If the proposed Sembcorp Marine Rights Issue and Demerger from SCI are approved by shareholde
Slide 39: Outlook
Outlook ❖ Sembcorp Marine is gradually resuming project executions safely and progressively. How soon the Group’s workforce will be allowed to return to full strength will determine the business outlook in subsequent quarters. ❖ Sembcorp Marine will work to ensure adequate liquidity and financial st
Slide 40: Agenda
Agenda • President & CEO Address • Group Finance Director Address • Question and Answer session
Slide 41: 1H 2020 Performance Highlights
1H 2020 Performance Highlights Key highlights: Group performance for six months to 30 June 2020: • Turnover totalled $906 million versus 1H 2019 of $1.54 billion. • EBITDA loss of $72 million. • Net loss attributable to shareholders of $192 million. • Group net orderbook stands at $1.91 billion. 41
Slide 42: Financial Highlights
Financial Highlights Group (S$ million) 1H 2020 1H 2019 % change Turnover 906 1,542 (41) Cost of sales (1,101) (1,515) (27) Gross (Loss)/ Profit (195) 26 n.m. EBITDA (72) 125 n.m. Operating (Loss)/ Profit (173) 3 n.m. Loss before tax (221) (16) n.m. Net Loss (192) (7) n.m. EPS (basic) (cts) (9.19) (
Slide 43: Financial Review: Revenue
Financial Review: Revenue 43
Slide 44: Financial Review: Net Profit/Loss
Financial Review: Net Profit/Loss 1H 2020 Net Loss: $192 million 300 250 200 150 218 100 13 50 66 42 0 -7 -50 -50 -24 -130 -100 -192 -150 -200 -250 1H 2H 44
Slide 45: Business Review: Turnover by Segments
Business Review: Turnover by Segments 1H 2020: $906 million 1H 2019: $1.54 billion Specialised Shipbuilding Other Offshore Specialised 4% Activities Platforms Shipbuilding Offshore 3% 3% 1% Platforms Repairs & 14% Upgrades Rigs 16% 16% Rigs 35% Repairs & Floaters Upgrades 35% Floaters 28% 45% Turnov
Slide 46: Drilling Solutions
Drilling Solutions Rig building revenue was $141 million in 1H 2020 (1H 2019: $537 million) due to lower offshore rig building activity and the production time out due to COVID-19 restriction order. Revenue came mainly from the two Transocean drillship projects which are in the WIP stage. REVENUE –
Slide 47: Non-Drilling Solutions - Production
Non-Drilling Solutions – Production (FPS0s/FPUs/Specialised Offshore Vessels) • 1H 2020 Floater revenue was $318 million (1H 2019: $685 million) with the decline due to lower percentage Offshore Floating recognition from ongoing projects due to production time out from COVID-19 restriction order at
Slide 48: Non-Drilling Solutions - Offshore Platforms
Non-Drilling Solutions - Offshore Platforms • Offshore Platforms revenue was $130 million in 1H 2020 (1H 2019: $49 million) on contributions from Hornsea II Formosa2, Tyra Wellhead platforms & Tangguh projects. REVENUE – OFFSHORE PLATFORMS No. of ($ MILLION) Offshore Platforms projects Brief descrip
Slide 49: Non-Drilling Solutions - Specialised Shipbuilding
Non-Drilling Solutions - Specialised Shipbuilding • Revenue from Specialised Shipbuilding was $35 million for 1H 2020 on recognition of ongoing Ropax ferries projects and the 12,000 cubic metres LNG bunker vessel project. Specialised Shipbuilding ($ million) 40 No. of Specialised Shipbuilding projec
Slide 50: Repairs & Upgrades
Repairs & Upgrades • Revenue from Repairs & Upgrades totalled $258 million in 1H 2020 (1H 2019: $245 million), on higher average revenue per vessel due to improved vessel mix on relatively higher value works. REVENUE – REPAIRS & UPGRADES ($ MILLION) 605 % Period 1H 2020 1H 2019 change 476 No. of ves
Slide 51: Capital, Gearing and ROE
Capital, Gearing and ROE Group ($ million) Jun-20 Dec-19 % change Shareholders' Funds 1,980 2,174 (9) Net Debt 4,220 4,012 5 Net Working Capital (259) (310) (16) Net gearing ratio (times) (excluding subordinated loan) 1.35 1.14 18 Interest coverage ratio (times) (0.9) 0.8 n.m. ROE (%) annualised (18
Slide 52: Cashflow
Cashflow Group ($ million) 1H 2020 1H 2019 % change Operating (loss)/profit before working capital changes (47) 125 n.m. Cash (used in)/generated from operations (Mainly receipts from completed projects, offset by working capital for ongoing projects) (52) 296 n.m. Net cash flow (used in)/generated
Slide 53: COVID-19/Low Oil Price Impact – No significant new orders in 1H 2020
COVID-19/Low Oil Price Impact – No significant new orders in 1H 2020 Contracts Secured 3,000 3,000 Specialised 2,735 Shipbuilding/ Upgrades & Refurbishments Drillship 2,500 2,500 Semi-submersible - drilling/production/ intervention/crane 2,000 Jack-Ups 2,000 1,770 Offshore Platforms 1,487 1,500 1,50
Slide 54: Net Order Book at $1.91 billion
Net Order Book at $1.91 billion Net Orderbook by Product Type ($ million) 6,000 6,000 Drillships Semi-submersible 5,255 Jack-Up 5,000 5,000 4,709 Specialised Shipbuilding/Upgrades 1,269 & Refurbishment Offshore Platforms 4,000 1,309 Floaters 4,000 407 3,088 3,000 3,000 1,045 1,853 913 2,436 260 67 4
Slide 55: Agenda
Agenda • President & CEO Address • Group Finance Director Address • Question and Answer session
Slide 56: Forward-looking statements disclaimer
This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative exam
Slide 57: Appendix
Appendix
Slide 58: Transaction Overview
Transaction Overview Sembcorp Marine Ltd (“SCM”) and Sembcorp Industries Ltd (“SCI”) have jointly announced a Transaction involving the following 2 steps: 1 Recapitalisation of SCM 2 Demerger of SCM from SCI ▪ Renounceable underwritten rights Issue (“Rights ▪ Distribution in specie3 of the SCM Share
Slide 59: Transaction Step 1: Rights Issue
Transaction Step 1: Rights Issue Pre Transaction Post Rights Issue SCI Public SCI Public Shareholders Shareholders 49.3%1 50.7% 49.3%1 50.7% SCM Public SCM Public Shareholders Shareholders 61.0% 39.0% S$1.5bn 60.9%3 to 69.94% Subordinated 6.5%4 to 39.1%3 Credit Facility2 0%3 to 23.6%4 Transaction st
Slide 60: Transaction Step 2: Proposed Distribution
Transaction Step 2: Proposed Distribution Post Distribution SCI Public SCI Public SCM Public Shareholders Shareholders Shareholders 29.9%2 to 30.9%2 to 6.5%3 to 49.3%1 50.7% 58.0%3 35.4%3 39.1%2 (excluding SCM) (Recapitalised after S$2.1bn Rights Issue) Transaction steps 2 Loan swap and Demerger to
Slide 61: Summary of Benefits to Shareholders
Summary of Benefits to Shareholders Strengthen its liquidity position and balance sheet, enabling it to execute its existing projects and compete for high-value projects going forward Demerger will enable SCM to pursue a focused strategy and build further its core engineering and execution capabilit
Slide 62: Integrated Synergies, Global Possibilities.
Integrated Synergies, Global Possibilities.