Sembcorp Industries expects the market environment to remain challenging amid a weak offshore and marine sector.
The firm said yesterday that while exploration and production spending in the energy sector is expected to rise, a robust recovery is forecast to take some time.
Group president and chief executive Neil McGregor said: "With a deep industry downturn on the one hand and market disruptions on the other, we recognise the need to be both prudent and agile.
"We will be disciplined on cost, cash flow and balance sheet, while at the same time smart about capturing opportunities and reshaping Sembcorp for the future."
The company also said it expects the urban development business to deliver a better performance this year, underpinned by land sales at its developments in Vietnam, China and Indonesia.
Utilities, which accounted for 78 per cent of the firm's second-quarter net profit reported yesterday, is one area to watch for. The firm is anticipating weaker performance for operations in China this year, compared with last year, owing to the expiry of a joint venture agreement.
"In Singapore, the centralised utilities, gas and solid waste management businesses are expected to remain steady. However, the power business continues to face intense competition," it added.
AT A GLANCE
REVENUE: $2.3 billion (+23.2%)
NET PROFIT: $55.3 million (-36.1%)
INTERIM DIVIDEND: Three cents per share (-25%)
The challenging environment combined to send net profit plunging 36.1 per cent for the three months to June 30, despite growth in revenue.
Second-quarter revenue climbed 23.2 per cent year-on-year to $2.3 billion, driven by higher contributions from the utilities segment, which pulled in $1.6 billion in turnover.
The increase was partly offset by a weaker showing in the marine segment, which posted a 28 per cent decline in revenue to $655.5 million due largely due to lower contribution from its rig building and offshore platform projects, it added.
General and administrative expenses rose 20.7 per cent year on year to $113.9 million in the second quarter. This was caused mainly by refinancing costs for a thermal power plant in India.
The poor numbers have seen the recommended interim dividend cut 25 per cent to three cents per share from four cents last year.
Quarterly earnings per share fell from 4.29 cents last year to 2.54 cents while net asset value per share inched up slightly to $3.85 as at June 30, from $3.75 as at Dec 31 last year.
First-half net profit came in at $174.4 million - down 9.9 per cent year-on-year - while turnover rose 18 per cent to $4.4 billion.
The counter closed two cents down at $3.22 yesterday before the results were announced.