Sembcorp Industries Q1 profits plunged 34.1% to $76.65m

It blamed low business volume in its marine segment and low land sales.

For the first quarter of 2018, the profits of Sembcorp Industries (SCI) plunged 34.1% YoY from $116.3m to $76.65m. Turnover, however, jumped 30% to $2.76b, it said in its financial statement.

It noted that profit contributions from its marine segment were lower due to lower overall business volume, especially in rigs & floaters and offshore platforms, which impacted the absorption of overhead costs and lower land sales from urban development.

Urban development’s net profit in was mainly from industrial land sales from Vietnam, SCI said. “This amount was, however, lower than last year’s commercial and residential land sales recognised from Nanjing, China.”

Its utilities segment was the biggest contributor to profits, however, its improved performance was not enough to offset the weak performance of the other two segments. Utilities’ profit jumped 27% YoY, boosted by Singapore and China as key contributors.

Its utilities segment’s turnover grew 14% to $1.51b mainly due to higher High Sulphur Fuel Oil (HSFO) prices and higher contribution from its India and Changzhi water treatment plant which commenced operation in September 2017.

Marine’s turnover soared by 58% to $1.18b thanks to higher revenue recognition for rigs and floaters upon the delivery of three jackup rigs. Excluding the effects on the adoption of SFRS (I), revenue would have been 15% higher than last year at $858m.

“The market environment is expected to remain challenging in 2018,” SCI commented, “A broader-based global recovery is underway, aided by a rebound in investment and trade. As the group repositions its businesses for the future, it is confident that it is well-placed to benefit from the market’s recovery.”