UPDATE: Sembcorp Industries reports 3Q18 net profit fell 12 percent on marine segment loss

A Sembcorp Industries truck picks up refuse in Singapore’s Geylang neighborhood; taken October 2018.A Sembcorp Industries truck picks up refuse in Singapore’s Geylang neighborhood; taken October 2018.

Sembcorp Industries reported third quarter net profit fell 11.6 percent on-year to S$82.33 million due to losses from its marine segment.

That was above the S$78 million forecast by CGS-CIMB, but below what the brokerage said was a consensus forecast of S$94.9 million.

Excluding the marine segment, net profit would have climbed 207 percent to S$100.2 million, the company said.

That was after the marine segment posted a loss on the sale of a semi-submersible, and saw continued low overall business volume, partly offset by margin from newly secured production floater projects, Sembcorp said. In the year-ago quarter, the marine segment also had a net positive effect from the contract termination of two rigs, which entitled the company to the downpayments, it said.

Turnover rose 36.3 percent on-year in the quarter ended 30 September to S$3.02 billion, the company said in a filing to SGX before the market open on Friday.

Utilities turnover rose 26.7 percent on-year in the period to S$1.78 billion, and its net profit increased 231.0 percent to S$90.97 million, it said.

Marine turnover increased 60.2 percent to S$1.17 billion, while it reported a net loss of S$17.93 million, Sembcorp Industries said.

The increase in utilities’ turnover was due to higher Singapore revenue on a higher high sulphur fuel oil (HSFO) price, higher volume and prices for India, higher generation from Teesside and contribution from U.K. Power Reserve (UKPR), acquired in the second quarter, and contribution from Changzhi water treatment plant in China, which started commercial operation in September 2017, Sembcorp said.

Marine turnover rose on the delivery of two jack-up rigs and revenue recognition for newly obtained projects, it said.

General and administrative expenses increased 49.2 percent to S$132.76 million in the quarter on higher personnel and related costs, transaction and integration costs for UKPR and an additional provision for fines of S$25.0 million, while other operating expenses rose 22.0 percent to S$54.65 million, it said.

For the nine-month period, Sembcorp reported net profit fell 9.2 percent on-year to S$240.90 million, while turnover rose 37.8 percent on-year to S$9.12 billion.

Outlook

In its outlook, Sembcorp said it expected the utilities business would post an improved performance this year as the India energy business was expected to be profitable despite a weaker upcoming fourth quarter.

In the marine segment, it said it expected capital expenditure on global exploration and production would continue to improve with firmer oil prices this year, but it added challenges would persist and overall business would remain relatively low for immediate quarters.

“The market environment is expected to remain challenging for the rest of the year. While a broader-based global recovery is underway, downside risks to global growth have risen amidst rising trade and geopolitical challenges,” the company said.

This article was originally published on Friday 2 November 2018 at 7:06 A.M. SGT; it has since been updated. 

 

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