Sembcorp Industries said yesterday its third-quarter numbers were hit by the continued downturn in the oil and gas sector, which dragged down its marine and offshore engineering businesses.
Net profit for the three months ended Sept 30 fell 55.9 per cent from the same period a year earlier to $53.9 million. Turnover for the quarter was $2.14 billion, down 10.8 per cent year on year.
It was a tough quarter for most of its businesses, with only the utilities division posting a profit gain, of 21 per cent, thanks to a better performance by its operations in China, India and the Middle East.
Sembcorp's marine, urban development and other businesses, including offshore engineering, recorded losses. The marine division was hurt by lower profit contributions from rig-building projects, resulting from customers asking to delay taking delivery of their orders.
The share of losses from associates, higher finance costs, foreign exchange translation and impairment of available-for-sale financial assets also contributed to the net loss recorded in the marine business, Sembcorp said.
The urban development division reported a net quarterly loss, given lower land sales recognition from Sembcorp's Nanjing Eco Hi-Tech Island and Chengdu Hi-Tech projects. However, the firm expects to recognise profit from land sales in China in the fourth quarter.
AT A GLANCE
NET PROFIT: $53.9 million (-55.9%)
TURNOVER: $2.1 billion (-10.8%)
Its other businesses recorded a loss due to a $46.2 million impairment on Gallant Venture, a vehicle distributor and developer in which Sembcorp holds a 12 per cent stake, and lower contributions from the offshore engineering business.
Earnings per share fell to 2.47 cents in the third quarter, from 6.29 cents a year earlier.
Net asset value per share declined to $3.58 at the end of last month, from $3.60 at the end of December last year.
Sembcorp warned that the business environment remained challenging, but added: "With our strategic presence in key emerging markets and strong capabilities, the group is confident that it will continue to create and deliver long-term value and growth.
"Sembcorp Marine expects to navigate these tough times, having gone through several down-cycles in the past."
The Singapore utilities business continues to face intense competition in the power market, it said, although its operations in China are expected to deliver a better performance than it did last year.
Meanwhile, the global oil and gas industry remains subdued and uncertain, Sembcorp noted.
"Receipts from project deliveries and achievements of progress milestones have improved Sembcorp Marine's cash flow and balance sheet during the quarter," it said.
"The business will continue to focus on liquidity, costs and balance sheet management. This includes active management of its manpower requirements in line with changing needs."
The urban development business is expected to deliver a steady operating performance this year, Sembcorp said.
Sembcorp Industries shares rose three cents to $2.48 before the results were announced.