On Feb 20, Sembcorp Industries U96 U96 (SCI) reported a net profit before extraordinary items (EI) in FY2023 of $1.018 billion, up 38% y-o-y, and $1.02 billion up 45% y-o-y after EI. Including the loss from its discontinued operations, Sembcorp's earnings for the FY2023 stood 11% higher y-o-y at $942 million.
However, total turnover fell by 10% y-o-y to $7.042 billion. Net profit before EI translates into an earnings per share (EPS) of 57.21 cents and a return on equity (ROE) of 23.8%. EPS on a diluted basis for the full year stood at 51.99 cents.
Net profit from the gas and related services segment increased 30% to $809 million in FY2023 from $622 million in FY2022 mainly driven by higher power prices in Singapore. The signing of multiple long-term power purchase agreements (PPAs) during the year creates strong recurring income for the segment, providing earnings certainty to fund Sembcorp’s renewables growth, the company said.
Net profit before EI for the renewables segment grew 42% to $200 million, from $141 million in FY2022, driven by contributions from acquisitions in China and India, as well as higher contributions from energy storage and solar operations in Singapore. Since end-2022, 4GW of renewables capacity was secured through acquisitions and organic growth across key markets, bringing Sembcorp’s renewables capacity to 13.8GW.
Net profit before EI from the integrated urban solutions segment was $121 million compared to $150 million in FY2022 mainly due to lower commercial and residential land sales in the Vietnam urban business and the cessation of a public cleaning contract in the waste business.
For the 2HFY2023, Sembcorp has proposed a final dividend of 8.0 cents, bringing the total dividend for the FY2023 to 13.0 cents per share, up from the total dividend of 12.0 cents per share in the FY2022. The proposed final dividend, if approved at the group's annual general meeting (AGM) on April 23, will be paid on May 9.
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“2023 was marked by strong growth momentum in the renewables business. The signing of multiple long-term PPAs creates strong recurring income for our gas and related services business, providing earnings certainty to fund our renewables growth. We are encouraged by our strong performance in 2023 and will focus on the execution of our 2024 – 2028 strategy, to transform our portfolio from brown to green and drive energy transition," says Wong Kim Yin, Sembcorp's group president and CEO.
Looking ahead, Sembcorp expects earnings from its gas and related services segment to remain robust due to its "significantly contracted position". Contribution from the same segment will, however, be offset by a planned major maintenance in Singapore to "continued efficiency and high reliability of [the group's] asset". Income contribution from the Phu My 3 power plant in Vietnam will also cease in end-February.
The renewables segment is expected to perform well with more greenfield projects commissioned and brownfield acquisitions completed progressively. At the same time, the integrated urban solutions segment is expected to remain stable.
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As at Dec 31, 2023, cash and cash equivalents stood at $732 million.
Shares in Sembcorp closed 1 cent lower or 0.17% down at $5.75 on Feb 19.
