Sembcorp Industries reports 2Q19 net profit rose 20 percent

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 Wednesday its second quarter net profit rose 20 percent on-year to S$98 million, supported by its energy business.

Revenue for the quarter ended 30 June fell 29 percent on-year to S$2.37 billion, the company said in a filing to SGX.

“This performance was underpinned by our energy business. We continue to make progress in our strategy to reposition the business to become a more sustainable integrated energy player in the global energy transition,” Neil McGregor, group president and CEO of Sembcorp, said in the statement.

“We strengthened our renewables portfolio, with our Singapore solar power capacity growing over 40 percent to 166 megawatt peak and commissioned 200 megawatts of wind assets in India. We are also in the final stages of making a replacement decision on one of our combined heat and power facilities in Singapore to ensure we have a fleet of high efficiency assets to better serve our customers there,” McGregor added.

Net profit excluding the marine division was S$104 million for the quarter, down 10 percent on-year, the filing said.

Sembcorp declared an interim dividend of 2.0 Singapore cents a share, unchanged on-year.

Energy

The energy business posted second quarter net profit of S$92 million up 8 percent on-year, with India operations performed better and the China renewable businesses had increased capacity.

Turnover in the segment was S$1.56 billion, down 6 percent on-year, on decreases in Singapore, India and Bangladesh.

“The decline from Singapore came mainly from lower gas sales and lower turnover from the solid waste management business. India’s decline was mainly due to lower plant load factor of its thermal power mitigated by higher turnover from renewable with higher operational capacity,” the filing said. “The decline in contribution from S4 in Bangladesh was in line with the progress of its construction, which achieved commercial operations in May 2019.

Sembcorp said the energy business was expected to deliver a steady performance for the full year.

Marine

The marine business reported a second quarter net loss of S$6 million, narrower than the S$34 million net loss in the year-ago quarter, while turnover fell 55 percent on-year to S$731 million.

Turnover fell on lower revenue recognition from rigs and floaters and offshore platform projects, while the net loss was due to continued lower overall business volume, Sembcorp said.

“Challenges in the offshore and marine sector persist, and a sustained recovery in new orders will take some time. Competition remains intense and margins compressed,” Sembcorp said. “With insufficient new orders secured in the last few quarters, Sembcorp Marine is expecting the losses for the second half to be higher than the first half, with the full year losses projected to be similar in range to last year’s losses.”

Urban

The urban segment reported net profit of S$11 million, down 69 percent on-year, with turnover of S$1 million, unchanged on-year, due to the division’s businesses mainly comprising joint ventures and associates accounted for under the equity method.

The segment’s profit fell mainly on lower land sales in China, it said.

“Urban’s earnings growth is expected to continue into 2019, underpinned by a strong orderbook in Vietnam and the expected recognition of income from the sale of a residential development in China in the second half of 2019,” Sembcorp said.

Other businesses, which include minting, design and construction and offshore engineering, posted net profit of S$7 million, up from S$1 million in the year-ago quarter.

For the first half, Sembcorp reported net profit rose 20 percent on-year to S$191 million on revenue of S$4.85 billion, down 21 percent on-year.

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