Major Sembcorp customer to terminate utilities services agreement

SEMBCORP on Monday said it has received notice from major customer Eastman Chemical Singapore to terminate its utilities services agreement. This came after Eastman exited its manufacturing site operations on Jurong Island.

Eastman contributed to 5 per cent of Sembcorp's FY2020 net profit before exceptional items, from continuing operations. The group's profit from continuing operations for the period stood at S$157 million.

Sembcorp has been supplying utilities services to Eastman since 1999, it said in a bourse filing. It first flagged the potential exit in its H2 results presentation in February. Eastman was not named at the time.

It also said that another customer's facilities in the UK were undergoing a one-year overhaul. Eastman and this customer contributed about S$30 million of FY2020 net profit in total.

Sembcorp also flagged a potential impact on earnings in Singapore and Vietnam. This comes as the group's natural gas contracts in Singapore approach expiry in 2028, while its Phu My 3 power plant in Vietnam faces reducing tariffs as its power purchase agreement approaches expiry in 2024.

Shares of Sembcorp closed at S$1.94 on Friday, down S$0.04 or 2 per cent.

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