This article was originally published on Thursday, 21 February 2019 at 7:48 A.M. SGT; it has since been updated.
Sembcorp Industries reported on Thursday its fourth quarter net profit fell 10 percent on-year to S$106 million as its India operations turned around to profitability and the urban development business posted a record net profit. The results beat some analysts’ forecasts.
That was despite difficult conditions in the offshore and marine industry.
Revenue for the quarter ended 31 December rose 7 percent on-year to S$2.57 billion, it said in a filing to SGX before the market open on Thursday.
For the full year, Sembcorp reported net profit of S$347 million, down 9 percent on-year, on revenue of S$11.69 billion, up 30 percent on-year.
That beat an average forecast for net profit of S$313.05 million from four analysts. Daiwa had forecast revenue of S$11.11 billion, while UOB KayHian had estimated revenue of S$10.36 billion.
But the company issued a cautious outlook.
“The market environment is expected to be challenging in 2019, especially for the offshore and marine sector which remains in a prolonged downcycle. Global economic growth is projected to ease as markets face escalating risks including rising trade tensions and tightening financial conditions,” Sembcorp said.
“In this context, the group remains focused on executing strategy, improving performance and strengthening its balance sheet,” it said.
Utilities business revenue rises
For the fourth quarter, the utilities business posted a net profit of S$65 million, up from S$51 million in the year-ago quarter, while revenue was S$1.58 billion, up 13 percent on-year, with improved results mainly from the India operations. The segment had a year-earlier S$25 million provision for potential fines and claims against an overseas water business, it said.
The segment’s increased revenue was due to a higher contribution from Singapore on a higher High Sulphur Fuel Oil (HSFO) price, higher volume and prices for India, higher generation at the Teesside project and contribution from the U.K. Power Reserve (UKPR), which was acquired in the second quarter of last year, it said.
“In Singapore and China, underlying performance is expected to remain steady. The India energy business is expected to improve, underpinned by a positive long-term outlook for the India power market,” it said, adding 2019 would be UKPR’s first full-year contribution.
The marine business posted a net profit of S$1 million on revenue of S$913 million, slightly up on-year, mainly on revenue recognition for newly secured projects, offset by lower contributions from offshore platform projects, it said.
The urban development segment posted a record net profit of S$86 million for the full year, mainly on land sales in Vietnam and China, it said. For the quarter, it reported net profit of S$33 million, up 14 percent on-year.
Sembcorp proposed a final dividend of 2.0 Singapore cents, for a total dividend of 4.0 Singapore cents for the full year, down from 5.0 Singapore cent total dividend a year earlier.