Sembcorp Industries 9M15 Net Profit Down 20.2%

Sembcorp Industries reported a 9M15 net profit of $600.1 million, a drop of 20.2 percent from the net profit of $751.6 million in 9M14, mainly attributed to a slip in revenue.

Revenue saw a 13.4 percent decline to $7.1 billion due to lower contributions from the Marine segment and Utilities segment. Marine segment’s revenue decreased mainly due to lower revenue recognition for rig building projects and repair business. Marine segment’s customer deferment requests for jackup rigs had resulted in the revenue recognition suspended for several rig building contracts as well.

Poorer performance in the Utilities segment was primarily due to Singapore operations’ lower High Sulphur Fuel Oil (HSFO) prices recorded during 3Q15, partially mitigated by higher contributions from India operations from the commencement of Thermal Powertech Corporation India Limited’s (TPCIL) operations and acquisition of Green Infra Limited.

Coupled with increasing expenses across the board, namely General & administrative expenses (13.4 percent), Other expense (46.1 percent) as well as Finance costs (225.1 percent), the group’s profitability was dealt with a heavy blow.

Despite a dismal performance for 3Q15, the group remains positive for the prospect of the Utilities segment and expects the overseas business to continue delivering a steady performance with TPCIL commencing full operation in September 2015. Coupled with the expected completion of the divestment of its Australian waste management joint venture in 4Q15, the Utilities business should deliver better performance than 2014.

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