Sembcorp Industries reports 1H21 swung to net profit despite coal-plant impairment

Electricity advertisement for Sembcorp Industries. Note: Photo taken pre-CovidElectricity advertisement for Sembcorp Industries. Note: Photo taken pre-Covid

Sembcorp Industries reported Friday its first half swung to a net profit of S$46 million from a year-ago loss of S$42 million despite a S$212 million impairment on its 49 percent-owned Chongqing Songzao coal-fired power plant in China.

Excluding exceptional items, Sembcorp would have reported first half net profit increased 69 percent on-year to S$252 million, the company said in a filing to SGX Friday.

Turnover for the January-to-June period was S$3.3 billion, up 26 percent on-year, mainly on contributions from the conventional energy segment, the filing said.

Sembcorp declared an interim dividend of 2 Singapore cents a share, to be paid 24 August. No dividend was paid in the year-ago period.

Conventional energy

The conventional energy segment posted a net profit before exceptionals of S$185 million, up 46 percent from S$127 million in the year-ago period, on better performance in Singapore and India on higher energy demand and margins.

The segment includes natural gas, steam and electricity from fossil fuels such as natural gas and coal.

Turnover for the segment increased 25 percent on-year in the first half to S$2.76 billion, mainly on higher contributions from gas and gas-related businesses as well as coal businesses, Sembcorp said.

Renewables

The renewables segment reported first half net profit fell 27 percent to S$24 million from S$33 million in the year-ago period on lower wind resource for the India wind energy assets.

The segment’s main activities are providing electricity from solar and wind, energy storage and trading of renewable energy certificates; it also includes installation, operation and maintenances of solar, wind and energy storage assets.

Turnover for renewables rose 7 percent on-year in the first half to S$146 million on higher solar capacity in Singapore and higher revenue from energy storage in the U.K., offset by a lower contribution from India, Sembcorp said.

Integrated urban solutions

The integrated urban solutions segment reported net profit before exceptional items of S$63 million in the first half, down 2 percent from S$64 million in the year-ago period.

The segment provides urban, water, waste and waste-to-resource services; it includes large-scare integrated urban developments and integrated townships, such as industrial parks, business, commercial and residential spaces, water reclamation and treatment and solid waste management.

Turnover for integrated urban solutions increased 11 percent on-year in the first half to S$218 million, mainly on new contracts and a business acquired by the Singapore waste-management business, offset by the divestment of the water business sold in the year-ago period, Sembcorp said.

Sembcorp said its delivery has continued without disruption despite the impact of the Covid-19 pandemic.

In the first half, it secured another 105 megawatts of renewable energy projects in Singapore and Vietnam, with 78 megawatts of renewable energy capacity installed, the filing said.

Outlook

Wong Kim Yin, group president and CEO of Sembcorp, issued a cautiously upbeat outlook.

“While we delivered a resilient underlying performance in the first half of 2021, significant uncertainties remain across markets with the COVID-19 pandemic,” Wong said. “Despite the challenges ahead, we will press on with the strategic transformation of our portfolio
from brown to green and deliver long-term value and growth for our stakeholders.”

The company pointed to potential downside risks in the conventional energy segment across markets on market volatility and higher fuel costs, as well as planned maintenance shutdowns in Singapore, Myanmar and India in the second half.