The absence of a one-off gain put a sizeable dent in Sembcorp Industries' first-quarter results, it reported yesterday.
Earnings was $76.7 million for the three months to March 31, down 34 per cent from $116.3 million a year earlier.
Revenue moved the other way, up 30 per cent to $2.76 billion, thanks to higher contributions from its utilities and marine divisions.
The earnings hit came as the utilities, marine and urban development group had a previous one-off gain from disposing of its 30 per cent stake in Cosco Shipyard Group. This was completed in January last year and meant much lower non-operating income, from $48.6 million a year earlier to $1.05 million.
Deeper forex losses - due to marine's re-evaluation of its assets and liabilities from the US to the Singapore dollar, among others - further hurt the bottom line.
The utilities segment's turnover grew $187 million from a year earlier, thanks to higher revenue in the three key markets of Singapore, China and India.
AT A GLANCE
REVENUE: $2.76 billion (+30%)
NET PROFIT: $76.7 million (-34%)
Turnover for its marine segment rose $435 million on higher recognition for rigs and floaters upon the delivery of three jack-up rigs.
Earnings per share was 3.64 cents, down from 5.98 cents a year earlier, while net asset value per share was $3.90, up from a restated $3.88 as at Dec 31.
Sembcorp said the market environment is expected to remain challenging this year, but is confident about its ability to ride the recovery when that occurs as it repositions its businesses for the future.
Chief executive Neil McGregor told a briefing that the India energy business - comprising two thermal coal plants and renewable energy firm Sembcorp Green Infra - is still expected to become profitable collectively on an annual basis by the end of this year.
The group is preparing for the initial public offering of the India energy business. This is still on track according to its internal timeline, said chief financial officer Koh Chiap Khiong.
Sembcorp is seeing compressed margins in the Singapore power sector but is "well represented" in the Open Electricity Market which started in Jurong last month, said Mr McGregor.
Margins in the retail power business are typically higher than in the wholesale sector, and Sembcorp usually holds a larger retail position than its generation position, he said in response to a question.
But the market could change, and the group aims to have more merchant capability to anticipate such changes and position its portfolio in the right way, he added.
The group is also hopeful that the wholesale electricity price would rise as vesting contracts are cut back, as generation companies, having lost this stream of income, would seek compensation through the wholesale market, said Mr Koh.
Vesting contracts assure power generation companies a certain stream of income by providing a specified price for a specified amount of electricity, but these are being rolled back gradually as the threat of power market manipulation by big players has receded.
Sembcorp shares closed down one cent to $3.06 yesterday.