Marine segment remains the stone tied to sinking Sembcorp’s neck

It’s shaking its head over the segment’s 70% plunge.

There’s no arguing that Sembcorp Industries banks heavily on its Marine industries to thrive, and when its offshore business goes capsizing, indicated by a 70% plummet in earnings, there’s no sugarcoating in saying that the firm is in big trouble.

According to analysts from DBS, its 61% owned Marine subsidiary’s titanic sink could be blamed on profit reversals for five defered jackups, associate losses from Cosco and mark-to-market adjustments for Cosco shares.

DBS says the total losses is estimated to be over $100m.

While the marine segment remains a sinking ship, DBS says Sembcorp could draw hope from its thriving--but underachieving--utilities segment.

“Utilities segment saw marginal sequential improvement to S$90.3m after stripping out the S$54.7m gain from disposal of UK asset Bournemouth Water Investment in 2Q15. Singapore utilities, with PATMI of S$30.6m, would have posted a 28% q-o-q growth if not for a S$16m provision on bad debts,” DBS said.

DBS says Sembcorp could be further hounded by delayed payments up until the fourth quarter.

“There could be further provisions of a similar amount in 4Q15 if the customer continues to delay payment,” DBS said.