SINGAPORE (May 3): Sembcorp Industries posted 1Q18 earnings of $76.6 million, down the 34% from a year ago on lower non-operating income as well as lower share of results of associates and JVs.
Revenue for the first quarter ended March was $2.8 billion, up 30%.
This compared to estimated mean earnings of $99.3 million on revenue of $1.98 billion, according to Reuters.
In 1Q18, net profit of the Utilities business grew 27% to $70.3 million, with Singapore and China being its largest profit contributors.
The Urban Development business posted a net profit of $9.6 million compared to $37.2 million in 1Q17. The business’ strong performance in 1Q2017 was due to profit recognised for the sale of a 42.6-hectare land in Nanjing, China.
Meanwhile, the Marine business contributed a net profit of $1.8 million compared to $22.6 million in 1Q2017. This was mainly due to lower contributions from offshore platform projects and the absence of one-off gains from the disposal of Cosco Shipyard Group.
Return on equity (annualised) for the group was 4.3% and earnings per share amounted to 3.6 cents.
Cash and cash equivalents stood at $2.2 billion.
In its FY18 outlook, Sembcorp says the market environment is expected to remain challenging although broader-based global recovery is underway, aided by a rebound in investment and trade.
For its Marine division, global exploration and production (E&P) spending trend continues to improve due to firmer oil prices in the first quarter of 2018. However, the overall industry outlook remains challenging.
Despite improvement in E&P CAPEX spending outlook, it will take some time for this to translate into new orders. Margins remain compressed with intensifying competition. Based on existing orders, overall business volume and activity is expected to remain low, and the trend of negative operating profit may continue.
The Urban Development business has a healthy orderbook. It expects income contribution from the sale of its property developments in China and Vietnam. The business is expected to continue to perform well in FY18.
No dividend was recommended for the period.
Shares in Sembcorp closed at $3.07 on Wednesday.
