Sembcorp Industries' profits dropped 29% to $247m in 2019

The contraction in profits was due to losses incurred by the marine and energy business.

Sembcorp Industries’ net profit posted a 29% decline to $247m in FY2019, from $347m in FY2018. The company’s turnover similarly decreased for the year, reporting an 18% decline to $9.62b, from $11.69b in FY2018.

On a quarterly basis, net profit decreased from $106m to a negative $15m YoY in Q4. Turnover for the quarter also decreased 10% to $2.32b, compared to $2.57b in the same quarter in 2018.

The decrease in net profits was attributed to losses in the marine business as well as impairments incurred by the company’s energy assets. The marine unit turned in a loss of $85m in 2019, whilst exceptional items totalled $165m for the energy business.

The loss in the marine unit was mainly due to the accelerated depreciation for the Tanjong Kling yard and continued low overall business volume, which is partly offset by profits from the repairs and upgrade business.

Meanwhile, the impairments for the company’s UK Power Reserve (UKPR) assets were due to the challenging market in the UK. Performance was impacted by an increase in energy capacity, reduction in underlying demand, and moderated grid volatility.

The wastewater treatment assets in China also underwent impairments due to existing facilities that have not sufficed the effluent discharge standards to be enforced by January 2021 in China.

Breaking down the company’s turnover by businesses, the energy business slid 16% to $1.33b in Q4, whilst turnover for the marine business decreased 32% to $624m for the quarter.

The lower turnover from the energy business was attributable mainly to lower provision of energy products and related services in Singapore, whilst lower revenue recognition from rigs and floaters projects lowered the marine business’ turnover for the quarter.

The urban business saw a surge in turnover, increasing from $2m to $278m. The expansion was mostly from the sale of Nanjing Riverside Grandeur (NJRG) residential property in China.