Sembcorp lifts interim dividend to 11 cents on stronger second-half outlook

SINGAPORE – Sembcorp Industries announced on Aug 13 a higher interim dividend of 11 cents per share for the first half of 2026 – up from nine cents per share a year ago – as it expects stronger financial results for the second half.

This reflects confidence in the company’s future performance, it said in a Singapore Exchange filing before trading hours.

Sembcorp also expects more contributions from Australian energy supplier Alinta Energy, which it acquired in June.

This is even as the Singapore energy and urban solutions provider saw its underlying net profit fall 25 per cent to $369 million for the first half of 2026, compared with $491 million in the first half of 2025.

When taking in one-off acquisition costs, net profit fell by a larger margin of 72 per cent. Sembcorp had incurred a $155 million one-off transaction cost for the acquisition of Alinta.

Underlying net profit for Sembcorp’s three segments – gas and related services, renewables and integrated urban solutions – also declined.

However, the company said that if the Alinta acquisition had been completed in January instead of June 2026, net profit would have been $558 million, taking in six months of Alinta’s contributions.

Sembcorp group chief executive Wong Kim Yin said: “Alinta has performed better than expected in the first half of 2026.

“Looking ahead, we expect a stronger second-half performance, supported by the resilience of our diversified portfolio, contributions from Alinta and improved earnings prospects for our Singapore business.”

He added that as an integrated energy player, Sembcorp is well-positioned to capture structural demand growth from data centres and AI-related infrastructure.

“Our interim dividend of 11 cents per share, up 22 per cent from last year, reflects our confidence in the group’s future performance and our commitment to sustainable shareholder returns,” he said.

At the results briefing, Wong said that Sembcorp recognises that in dividends, it lags behind its “peer group” internationally and domestically.

He pointed out that the dividend payout ratio for ST Engineering is around 80 per cent, while the ratios for the three local banks have also been high.

Sembcorp’s dividend payout ratio is around 50 per cent for the first half of 2026, an analyst noted at the briefing.

Wong said: “If we want to attract capital to come into our stock, we have to increase our ratios to at least be on a par with our peer group.”

He added that Sembcorp has been steadily raising its dividend payouts over the last few years.

Another reason to raise the dividend in 2026 is that it expects brighter days ahead.

Stronger outlook in second half

Sembcorp expects stronger earnings for the gas and related services segment in the second half of the year. This segment saw net profit fall 14 per cent in the first half of 2026.

Stronger earnings will be supported by the commissioning of a 600-megawatt hydrogen-ready power plant, which remains on track to be completed by the last quarter of 2026.

Wong added that in the Middle East, Sembcorp operations performed well despite geopolitical tensions. It expanded its presence there in June through a power project in Abu Dhabi, which will provide long-term earnings visibility and stable cash flows, he said.

Sembcorp also secured a 150-megawatt long-term power purchase agreement with chip giant Micron in January.

Wong said: “AI and data centre growth is increasingly becoming relevant to our portfolio. New data centre bids require both power supply reliability and a credible pathway to low-carbon energy.

“This plays to Sembcorp’s strengths, given our integrated energy portfolio and the suite of lower-carbon solutions.”

Other than Singapore, Sembcorp’s Wilton site in Britain also provides a strong platform for data centre development, he said. Some 200 megawatts of data centre capacity is currently planned for that area.

In South-east Asia, Sembcorp has also established data centre footholds in Vietnam and Indonesia.

Meanwhile, the integrated urban solutions segment is also projected to do better in the second half, driven by higher land sales.

“The business continues to make steady progress in developing 0.9 million sq m of ready-built factories, which are expected to contribute to recurring income upon completion,” Sembcorp said.

However, the renewables segment is expected to bring in lower earnings for the second half of 2026, driven by seasonal and tariff-related challenges. First-half net profit for this segment fell 48 per cent.

Sembcorp said it expects lower resources and tariffs in China, partially offset by the contribution from new operational capacity in India.

In response to analyst queries on renewables, Wong said that from a longer-term business perspective, Sembcorp still believes renewable sources will have a place in the energy mix of countries and grids of the future.

“You saw what happened in the Middle East,” he said, referring to the energy crisis triggered by skyrocketing oil prices due to the war.

“Everybody has some sun. Everybody has some wind. So there will be that desire to deploy assets in order to capture some of these... Renewables is a place in which we will continue to be looking for opportunities.”

He added that if nuclear also becomes a source of energy, Sembcorp will position itself to capture market share and serve its customers.

Overall, Sembcorp still expects its second-half underlying net profit to exceed that of the first half of 2026.

Wong said the highlight is Alinta contributing to the group’s earnings base, and the catalysts in the second half of the year that make Sembcorp confident of a strong full-year performance.

“The second half will be much better than the first... and that anchors the confidence that we will continue with our commitment to sustain the growth in our dividend even while we deleverage,” he said.

Sembcorp shares were trading at almost 3 per cent lower at $5.55 at around 3pm on Aug 13. They recovered slightly to close at $5.59.