By BLOOMBERG
Sembcorp Marine Ltd, the world’s second- largest rig builder, slumped to the lowest price in more than six years after the company said it expects to post its first quarterly loss since 2003.
Shares of Sembcorp Marine fell as much as 5.3% to S$1.95, its lowest intraday level since April 2009, and traded at S$1.97 as of 9:16 am in Singapore. The stock was the second-worst performer on the MSCI Asia Pacific Index Wednesday.
Builders of floating drilling and production facilities have been reporting losses this year as the slump in oil prices has prompted companies to cut spending. That’s also led to some customers canceling orders with shipyards and requesting delivery delays as demand for exploration weakens.
Sembcorp Marine is facing a challenging environment and customers are deferring or seeking to delay deliveries, which will have a negative impact on fourth-quarter earnings, the company said Tuesday. The rig builder will announce earnings on Feb 15.
“The fourth-quarter loss is worse than we had expected,” Rex Feng, a Hong Kong-based analyst at Barclays Plc said in a note Wednesday. “We expect the current offshore downturn to be sharper and longer than the market appears to currently expect.”
Sembcorp Marine is also in a dispute over an order its subsidiary PPL Shipyard Pte received to build a jack-up rig for US$214.3 million (RM906.1 million) in February 2014. A unit of Marco Polo Marine Ltd has terminated the contract after it found cracks on all three legs of the rig and is seeking a refund of about US$21.4 million it paid initially from PPL. The rig builder filed a case against Marco Polo in the Singapore High Court.
Sembcorp Marine’s third-quarter net income dropped 76% as customers requested for delivery deferrals for jack- up rigs.
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