Sembcorp Marine reported a net loss of S$21.8 million in the third quarter, reflecting a hit on business on account of the sustained downturn in the oil and natural gas market.
The rig builder said it was cutting as many as 8,000 jobs and putting in place a salary freeze for the management staff.
Sembcorp had made a net profit of S$32.1 million in the third quarter a year ago. The company said it was affected by higher financing costs, customers deferring rig deliveries, losses from associates and foreign exchange impact.
The company also said revenue dropped 21 percent in the three months ended September. Group revenue was S$2.71 billion compared with S$3.64 billion for same quarter last year. The net order book at end of September remained "reasonably robust" at S$8.4 billion, the company said.
Sembcorp said the job cuts were to take place in both drilling and non-drilling sectors. "We have reallocated excess manpower from drilling to non-drilling work without compromising on safety and quality of execution. We have also terminated less efficient sub-contractors and allow for natural attrition of our employees.
"These measures have resulted in a reduction of about 8,000, comprising employees and sub-contractors manpower," the company statement said.
It also said it was cutting jobs at Brazil operations. "For our EJA yard in Brazil, we have also taken steps to reduce manpower level commensurate with the level of activities."
The CEO's statement also detailed other cost management plans at Sembcorp. "In addition to manpower optimisation, we have taken measures to reduce our operating costs by implementing salary freeze and adjustments to the variable remuneration components for management staff since 2015."
Sembcorp, majority-owned by industrial conglomerate Sembcorp Industries, said it is trying to protect the interest of the shareholders in the face of the continued delay in rig deliveries. "We have taken steps to protect our interests and are evaluating other courses of action, including sale to third parties," Sembcorp Marine said, adding that several rig builders have deferred delivery.
According to Reuters, the offshore and marine industry in Singapore is facing a crisis as companies have cut spending to manage the fall in oil prices. Marine services companies like Sembcorp Marine and Keppel Corp, as well the shipbuilding and offshore support companies, have been severely affected by this.
However, the company assured the shareholders that the long-term future was optimistic. "Despite the challenging outlook and intense competition, we believe that growth prospects for the offshore and marine industry remains encouraging over the long term."