Lower marine, utilities contributions hit Q4 gains

Reduced contributions from its utilities business and a net loss from the marine unit sent fourth-quarter earnings plunging at Sembcorp Industries.

Net profit came in at $22.78 million for the three months to Dec 31 while revenue rose by 4.8 per cent to $2.12 billion, but this was more than offset by a 40.9 per cent decline in gross profit to $147.86 million. Earnings per share were 0.62 cent compared with 7.71 cents a year earlier.

Profit before tax fell 99.9 per cent to $120 million after a 48.3 per cent surge in general and administrative expenses. These rose to $134.86 million, compared with $90.95 million for the same period in 2016, mainly due to a provision for potential fines and claims.

Non-operating income was 52.3 per cent lower at $18.35 million, while non-operating expenses went down by 64.4 per cent at $6.66 million.

Full-year net profit was $230.77 million, down 41.6 per cent despite a higher turnover of $8.35 billion, up 5.5 per cent.

Earnings per share for the year were 10.51 cents compared with 19.92 cents a year earlier, while net asset value per share was $3.90 at the end of last year, up from $3.75 a year earlier.

  • AT A GLANCE

  • REVENUE: $8.35 billion (+5.5%)

    NET PROFIT: $230.77 million (-41.6%)

    FINAL DIVIDEND PER SHARE: 2 cents (-25%)

The fourth-quarter bottom line took a hit from lower or negative net profit contributions from the utilities and marine divisions, which more than offset improved performance from its urban development business.

Earnings from utilities fell 84 per cent to $14.10 million, while marine slipped to a net loss of $21.19 million on lower business volume compared with a profit of $20.94 million a year earlier.

Urban development was the only division that bucked the decline with a 7 per cent increase in net profit to $29.31 million for the quarter, mainly on higher land sales from its China operations.

President and group chief executive Neil McGregor described 2017 as "a challenging year" but he argued that these challenges, along with market and industry disruptions, also offer the group a window "to take decisive steps" in repositioning for "success in a rapidly changing world".

He unveiled a new business model for utilities. Sembcorp Industries will back Sembcorp Marine through the cycles, he said, dismissing market talk that the parent group will privatise this troubled unit.

The group proposed a final dividend of two cents a share.

Sembcorp shares closed down three cents to $3.24 yesterday after the results were announced.

A version of this article appeared in the print edition of The Straits Times on February 24, 2018, with the headline 'Lower marine, utilities contributions hit Q4 gains'. Print Edition | Subscribe