Sembcorp profit up 143% despite revenue drop

Sembcorp Industries' fourth-quarter earnings soared, with the utilities business and overseas operations contributing greatly.

Net profit surged by 142.6 per cent to $147.5 million for the three months ended Dec 31, even as turnover fell by 16.3 per cent to $2.03 billion.

The utilities business reported higher revenue from the rising price of high sulphur fuel oilin its Singapore operations, greater turnover from India and construction revenue for its Myanmar project.

Sembcorp's marine division was hurt by lower turnover contributions from rig-building projects as customers asked to delay delivery, as well as lower revenue from offshore platform projects.

Still, the unit reported a lower share of losses from associates, alongside gains from selling available-for-sale financial assets, Sembcorp said yesterday.

The urban development division reported a higher net profit in the quarter, owing to higher land sales from its Vietnam operations and its China associates.

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Full-year net profit fell by 28.1 per cent to $394.9 million, as turnover slid by 17.2 per cent to $7.91 billion.

In the year, the utilities business contributed $348 million in net profit to the group. Sembcorp noted that the utilities' overseas operations now contribute 63 per cent of the net profit.

Excluding one-off items, the utilities business recorded a 4 per cent profit growth, compared with a year earlier, driven by record profits from its China operations.

The firm proposed a final dividend of four cents a share.

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Sembcorp Industries chief executive Tang Kin Fei said: "In 2016, the utilities business continued to provide a strong income base as the largest profit contributor to the group.

"Operations outside Singapore contributed over 60 per cent of the business' net profit, demonstrating the success of our overseas strategy."

While the market environment is expected to remain challenging this year, he said that "with strong capabilities and resilient businesses, Sembcorp continues to be well-positioned for the future".

The company added that Sembcorp Marine believes a more robust recovery may take longer, but growth prospects for the offshore and marine industry remain positive in the medium to long term.

Quarterly earnings per share was 7.71 cents, up from 2.86 cents a year earlier, while net asset value per share was $3.75 as at Dec 31, up from $3.60 the previous year.

Sembcorp Industries shares rose 16 cents to close at $3.36 before the results were announced yesterday.

This article was first published on Feb 24, 2017.
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