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Sembcorp Industries’ Q3 net profit down 38%

The Straits Times/2 November 2017

SINGAPORE – HIGHER finance costs and lower revenue eroded third-quarter earnings for Sembcorp Industries, which also wrote down $56.3 million on its utilities business in Singapore.

Net profit for the group tumbled 37.7 per cent to $33.6 million from the previous year.

This translates to earnings per share of 1.23 cents, down from 2.47 cents in the same period a year ago.

This was, however, nearly all erased by an increase of $36.1 million in finance costs. These were due to SembMarine’s higher bank borrowings and finance costs for Sembcorp’s newest thermal power plant in India, Sembcorp Gayatri Power.

Sembcorp made an impairment of $25.8 million as it wrote off the steam boilers in the Sakra area on Jurong Island which had been built in the late 1990s. The group plans to use an upcoming waste-to-energy plant on Jurong Island to produce steam more efficiently instead.

It also impaired $26.4 million on the goodwill value for Sembcorp Cogen that was acquired in 2003, as the cogeneration plant has been making losses over a period of time, said chief financial officer Koh Chiap Khiong at a briefing.

Another $4.2 million in impairment was made in relation to the utilities division’s investment in an associated company.

At the briefing, chief executive Neil McGregor also told analysts and reporters that it has signed an agreement to sell utilities assets that were previously serving Jurong Aromatics Corporation (JAC) to ExxonMobil Asia Pacific.

ExxonMobil had acquired JAC’s plant earlier this year.

The boilers, cooling tower and associated assets will be sold for US$113 million, he said. The deal will be completed between the second half of 2019 and first half of 2020.

Shares in Sembcorp fell two cents, or 0.6 per cent, to $3.38 before the results were announced.

Correction note: Sembcorp has clarified that the steam boilers which are impaired are not part of its power plant. An earlier version also stated that the deal with ExxonMobil will be completed between the second half of 2019 and first half of 2010. This is incorrect. It should be first half of 2020. We are sorry for the error.

News Source: The Straits Times
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