SINGAPORE (Feb 21): Sembcorp Industries reported earnings of $106 million for the 4Q ended Dec 2018, representing a 10% decline from restated 4Q17 earnings of $118 million as the Marine segment continued to impact the absorption of overhead costs.
This brings Sembcorp’s FY18 earnings to $347 million, down 9% from restated earnings of $383 million a year ago.
Over 4Q, the group recorded a 7% rise in turnover to $2.6 billion from $2.4 billion the previous year, driven by higher contributions from the Utilities businesses.
Utilities turnover, which grew 13% y-o-y to $1.6 billion in 4Q18, was mainly due to higher revenue in Singapore, which benefitted from higher High Sulphur Fuel Oil (HSFO) prices; higher volume and prices for India; higher generation from Teesside; and contributions from UK Power Reserve (UKPR), which was acquired in 2Q18.
After accounting for exceptional items, the segment contributed to $65 million in net profit, up nearly fivefold from $14 million a year ago.
The Urban Development segment, which comprise mainly associates or joint ventures accounted for under the equity method, registered a 33% lower turnover of $2 million compared to $3 million in 4Q17. Nonetheless, net profit for this segment grew 14% to $33 million from restated segmental net profit of $29 million.
The Marine business’s turnover grew marginally y-o-y to $913 million from $912 million in 4Q17, as revenue recognition for newly-secured projects were partially offset by lower recognition for offshore platforms projects. Nonetheless, the segment’s net profit for the quarter fell 99% on-year to $1 million from $71 million in 4Q17.
See: SembMarine reports FY18 loss of $74 mil; Expects business environment to stay challenging
Sembcorp says it expects the overall market environment to remain challenging in 2019, especially for the offshore and marine (O&M) sector as it remains in a prolonged down cycle.
With the consolidation of the Utilities business, the group expects this business to deliver a steady performance for the year as it continues to focus on lifting performance and investing in capabilities. It also intends to continue taking steps to manage costs at the Marine business.
As for Urban Development, the group expect earnings growth in this segment to continue into 2019, underpinned by a strong orderbook in Vietnam as well as income from the sale of a residential development in China.
The group has proposed a final dividend of 2 cents per share.
Together with the interim dividend of 2 cents paid out in Aug 2018, this would bring the group’s total dividend for FY18 to 4 cents per share.
“Our strategic initiatives will take time to bear fruit, especially given the prolonged offshore and marine downturn. However, as seen from our FY2018 results, our multi-business strategy provides resilience to the Group. By leveraging our strengths and embracing change, I am confident that the actions we are taking will put us in good stead as an integrated energy and urban company of the future,” says Neil McGregor, group president and CEO of Sembcorp.
Shares in the group closed 9cents higher at $2.66 on Wednesday.
