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Sembcorp Industries posts 13% fall in Q3 net profit to S$71m

MAINBOARD-LISTED conglomerate Sembcorp Industries on Thursday posted a 13 per cent decline in net profit for the third quarter ended Sept 30, as higher finance costs mainly arising from its marine and energy businesses took a toll on the bottomline.

The conglomerate engaging in energy, marine and urban development businesses recorded a net profit of S$71 million, lower than the S$82 million generated for the year-ago period.

Sembcorp Industries saw a 25 per cent spike to S$151 million in finance costs, which the group in its quarterly financial statements attributed mainly to higher average bank borrowings for the ongoing projects and working capital needs of its marine and energy businesses.

Also, it said that the increase was due to two of its power plants that have commenced operations, and therefore "interest costs are no longer capitalised".

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The fall in net profit caused its earnings per share to dip 13 per cent to 3.47 Singapore cents for the third quarter from 3.98 cents for the year-ago period.

Revenue stood at S$2.45 billion, down 19 per cent from S$3.02 billion a year ago.

As its "practice is to consider declaring dividends on bi-annual basis", no interim dividend was declared for the third quarter.

The conglomerate fared better in its net profit for the first nine months of the fiscal year, registering a 9 per cent improvement at S$262 million compared with S$241 million for the period a year ago. But its S$7.3 billion turnover for the nine months this year was 20 per cent lower than the S$9.1 billion in the year-ago period.

The revenue reduction was mainly due to lower revenue recognition from rigs and floaters and offshore platform projects for the marine business, said Sembcorp Industries.

The market environment continues to be challenging for the offshore and marine sector and Sembcorp Marine is expecting full-year losses. While there are downside risks to global economic growth expectations with heightened policy uncertainty and trade tensions, the group's diversified business portfolio is expected to provide resilience to weather the prevailing macroeconomic uncertainties," the conglomerate said.

Sembcorp Industries shares ended at S$2.29 on Thursday, up one cent or 0.44 per cent.