Sembcorp's performance “worse” in 2010

Phillip Securities Research said the company’s S$761mln net profit was 3.6% worse than its forecast.

The financial consultancy agency’s estimated Sembcorp’s yearly profit to be around S$789mln.

The company, which has interests in the water, energy and marine sectors, reported FY2010 revenue of S$8,764m (-8.4% y-y) and net profit before exceptional item of S$761m (11.4% y-y).

It announced the final dividend of S$0.17 for FY2010, which comprised the ordinary dividend of S$0.15 The bonus dividend of S$0.02 is 13.3% higher than the total dividend of S$0.15 for FY2009.

Utilities’ revenue rose due to greater High Sulphur Fuel Oil prices and the contribution from Cascal. Sembcorp’s Marine sector, however, reported lower turnover because of lower percentage of revenue recognition from its projects. Industrial parks benefited from more land and factory sales.

Utilities’ net profit rose because of growth in all its operations in Singapore, China, Asia, Australia, Middle East and Africa. The only exception was UK Teesside, which closed some of its facilities and was affected by lower market spreads for power and write down of ageing assets.

Marine gained from productivity improvements that resulted in higher profit margins. Industrial parks saw strong land sales in its Vietnam industrial parks and better contributions from Gallant Venture Ltd.

Sembcorp’s acquisition of Cascal, a leading player in the water and wastewater services market, in 2010. With the acquisition, is seen to be a boost to its revenue and net profit from its utilities business in FY2011E.

“As Sembcorp Industries has more utilities assets after the acquisition, we think that there is a possibility that it sets up an infrastructure trust and lists it on the stock exchange. Shareholders may benefit if it distributes shares in the trust to them,” Phillip Securities said.