Sembcorp posts $131m net loss in H1, warns of worse to come
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Three of Sembcorp Industries' four units - energy, marine and corporate - had racked up losses.
PHOTO: SEMBCORP INDUSTRIES LTD
SINGAPORE (THE BUSINESS TIMES) - Sembcorp Industries took a major hit in the first half as its earnings tumbled amid the pandemic with worse to come, it warned on Friday (July 17).
It recorded a net loss of $131 million for the six months to June 30 compared with a $191 million net profit in the same period last year.
The firm also indicated that more red ink is on the way: "The group expects to incur losses for the full year due to the expected continuing losses at Sembcorp Marine and exceptional items recorded in (the first half)."
Three of its four units - energy, marine and corporate - racked up losses.
The only unit to report a net profit - $38 million - was its urban segment, which handles projects such as industrial parks and business, commercial and residential spaces in Asia.
Its marine segment was the hardest hit, chalking up a net loss of $117 million.
While the marine business is resuming gradually, Sembcorp noted that the outlook in subsequent quarters will depend on how soon its workforce will be allowed to return to full strength.
Meanwhile, the reduced economic activity in multiple markets due to the pandemic has also depressed energy demand and prices, Sembcorp noted.
"In the second quarter, energy demand in Singapore, India and the UK declined by approximately 5 per cent to 20 per cent compared with the same period last year.
"The underlying performance of the energy business in 2020 is expected to be markedly lower than in 2019," it said.
The energy segment recorded a $5 million net loss, a drastic reversal from the $177 million net profit it reported in the same period last year.
Sembcorp added that the net profit for its energy business for the full year is also expected to be affected by the loss of contribution from divested assets and the absence of one-off income in Myanmar.
Other exceptional items, including a loss of $161 million and the expected currency loss upon the completion of its Chilean water business, are expected to have an adverse impact on full-year net profit.
Sembcorp shares closed flat at $1.78 on Friday.