Sembcorp suffers marine losses, Q4 profit plummets 75%

Sembcorp Marine Ltd workers cycle to their Admiralty Yard in Singapore in this Jan 13, 2016 file photo.
Sembcorp Marine Ltd workers cycle to their Admiralty Yard in Singapore in this Jan 13, 2016 file photo.PHOTO: REUTERS

Losses in the offshore and marine business proved a huge drag for conglomerate Sembcorp Industries, as fourth-quarter earnings nose-dived 74.7 per cent.

At its annual results briefing yesterday, group president and chief executive Tang Kin Fei also poured scorn on rumours that Sembcorp Industries might privatise its struggling unit, Sembcorp Marine.

"I must say that if the company can operate as a stand-alone and can operate healthily, and it's already 61 per cent (owned by us), we should reserve our money to grow other businesses that can give us higher yield," said Mr Tang.

  • AT A GLANCE

  • REVENUE: $2.42 billion (-9.2%)

  • NET PROFIT: $60.8 million (-74.7%)

  • FINAL DIVIDEND: 6 cents per share (-45.5%)

"The outlook in marine today, as you know, is not clear, so why would I want to pump in more money right now? Unless (SembMarine shares are) at a very low price... then I cannot refuse a good offer.

"We have so many new projects, new opportunities we can pursue, why not pursue those businesses? Why look inwards, not outwards?

"Whatever decision we make, it has to be accretive to Sembcorp Industries shareholders."

SembMarine shares have made strong gains in the past two days, even as the rig builder announced on Monday a net loss of $536.9 million for the three months to Dec 31, compared with the net profit of $174 million previously, as it set aside a hefty $609 million for impairment and provisions for rig contracts.

SembMarine's losses - its first in more than a decade - weighed heavily on Sembcorp Industries' quarterly net profit, which came in at $60.8 million, far less than the $240.6 million a year earlier.

But the group's utilities business held up well, with net profit surging 261 per cent to $395.2 million, thanks to divestment gains and higher contributions from its overseas operations.

Fourth-quarter revenue slid 9.2 per cent to $2.42 billion, on the back of lower turnover in both its utilities and marine divisions.

Net profit for the 12 months sank 31.5 per cent to $548.9 million, while revenue slid 12.4 per cent to $9.54 billion.

Earnings per share for the quarter was 2.86 cents, down from 13.33 cents previously. Net asset value per share stood at $3.60 as at Dec 31, up on the $3.15 as at the same time the year before.

The group proposed a final dividend of six cents per share, bringing the total dividend to 11 cents, down from the 16 cents in the 2014 fiscal year.

Mr Tang noted that the group has built up "a strong income base" in its utilities business, which delivered a 72 per cent jump in full-year net profit to $701.5 million, although this was offset by the marine business' net loss of $176.4 million and the 25 per cent drop in net profit for the urban development business to $33.5 million.

Sembcorp Industries shares rose two cents or 0.8 per cent to $2.53 yesterday, before the results were announced, while SembMarine shares closed five cents or 3.2 per cent higher at $1.62.

A version of this article appeared in the print edition of The Straits Times on February 18, 2016, with the headline 'Sembcorp suffers marine losses, Q4 profit plummets 75%'. Print Edition | Subscribe