Sluggish flow of new orders pushed the firm to trim manpower.
Marine and offshore engineering group Sembcorp marine is cutting costs as it expects challenging days ahead given its lack of new orders, as cited by OCBC Investment Research.
According to the brokerage firm, the group is still executing on its orderbook but little replenishment will inevitably drive down earnings. Its orderbook stood at $8.4n as at end 3Q16.
With this, the engineering group has taken measures to cut costs such as workforce reduction of about 8,000 since 2015 comprising of employees and subcontractors' manpower. It has also imposed salary freezes and wage adjustments.
"Two of the group’s yards will also be returned to the government next year, resulting in cost savings. Meanwhile, SMM will also dispose of its 30% interest in Cosco Shipyard Group, which will henceforth no longer be a drag on SMM’s results," OCBC noted.
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