Sembcorp Industries’ Q4 profit more than doubles to S$147.5 million

SINGAPORE - Industrial conglomerate Sembcorp Industries on Thursday (Feb 23) reported fourth-quarter net profit more than doubled from the corresponding period a year earlier, as its marine division bounced back into the black from steep losses previously.

For the three months ended Dec 31, net profit amounted to S$147.5 million, up from S$60.8 million in the year-ago period, even as revenue fell 16.3 per cent to S$2.02 billion, Sembcorp Industries said in an aftermarket filing with the Singapore Exchange.

The conglomerate’s Sembcorp Marine unit, in which it has a stake of about 61 per cent, posted a S$34 million net profit for the three months through December, turning around from a S$537 million loss a year earlier when it made large loss provisions. Revenue for the period fell 38 per cent to S$830 million as customers deferred projects.

In the fourth quarter, Sembcorp Industries’ marine business posted a net profit of S$20.9 million, compared to a loss of S$327.5 million in the year-ago period. Its utilities business suffered a slide in net profit to S$89.2 million from S$395.2 million in the previous corresponding period when it booked large exceptional gains from divestments. Its urban development business reported a rise in net profit to S$27.3 million from S$15.9 million previously, while its other businesses swung into a net profit of S$10 million from a loss of S$22.9 million previously.

For the full year, Sembcorp Industries’ net profit slumped 28.1 per cent to S$394.9 million as revenue fell 17.2 per cent to S$7.9 billion. The board proposed a final dividend of 4 cents a share, bringing the total dividend for the year to 8 cents per share.

Looking ahead, Sembcorp Industries warned of continued challenges as it sounded cautious optimism.

“While prospects for the oil and gas industry have taken a more positive turn following the November 2016 agreement by the Organisation of Petroleum Exporting Countries (OPEC) and major non-OPEC countries to cut production, Sembcorp Marine believes a more robust recovery may take longer. Despite the challenging outlook and intense competition, Sembcorp Marine believes that growth prospects for the offshore and marine industry remain positive in the medium to long term,” it said.

“Utilities’ China operations delivered record profits in 2016. Its performance in 2017 is expected to remain steady although lower than 2016 due to the expiry of the Yangcheng co-operative joint venture agreement in 2016... In Singapore, the centralised utilities, gas and solid waste management businesses are expected to remain steady. However, the power business continues to face intense competition.”

“The Urban Development business is expected to deliver a better performance in 2017, underpinned by land sales in its urban developments in Vietnam, China and Indonesia,” it added.