Sembcorp Q3 net profit down 37.8%

SINGAPORE - Sembcorp Industries said third-quarter net profit was hit by lower earnings in its utilities, marine and urban development businesses.

Net profit fell 37.8 per cent from the same period a year ago to S$122.3 million.

Turnover for the three months ended Sept 30 dropped 21.8 per cent from the same period a year ago to S$2.4 billion.

Utilities turnover fell as its Singapore operations recorded lower prices for high sulphur fuel oil prices. This was partially mitigated by a higher contribution from the firm's India operations.

Revenue in the marine business fell mainly due to lower revenue recognition for rig building projects and repairs.

Requests from customers to defer delivery of jackup rigs meant that revenue recognition had to be suspended for several rig building contracts.

Earnings per share fell to 6.29 cents in the quarter, down from 10.86 cents in the same period a year ago.

Net asset value per share grew from S$3.15 at the end of December last year to S$3.64 at the end of September this year.

Sembcorp said 2015 has been challenging for the Singapore energy business with continued intense competition in the power market and low oil prices. The overseas business, however, is expected to continue to deliver a steady performance.

Low oil prices, coupled with an oversupply of rigs in the global offshore exploration segment continue to weigh on offshore rig utilisation and charter rates, Sembcorp added.

Some customers are deferring or are seeking to defer the delivery of their ordered rigs. This has resulted in a delay in earnings recognition.

Despite the depressed market, the Marine business has secured S$2.9 billion in new contracts so far this year, bringing its net orderbook to S$11.6 billion.

"While the immediate operating environment in the offshore rig building industry remains very challenging, the business remains focused on the timely and effective execution of its current orderbook and efficient working capital management," Sembcorp said.

"The business is confident of the long-term fundamentals of the offshore and marine industry and believes its investments in new capabilities and facilities will help ensure sustainable returns for the business, both in Singapore and at its overseas yards."