Sembcorp: Demand For Rigs Remains Strong. 1H Numbers Down

Singapore’s Sembcorp Industries has reported a net profit of S$342.2 million and turnover of S$4.8 billion for the first half of 2013 (1H2013), compared to S$367.4 million and S$5.1 billion respectively in the corresponding period last year (1H2012).

Sembcorp’s main profit contributors continued to be its Utilities and Marine businesses, which contributed 53% and 39% of Group net profit respectively.
The Utilities business achieved a 4% growth in net profit in 1H2013. The business’ 1H2013 net profit grew to S$201.3 million from S$193.7 million, mainly attributable to our recently-acquired power assets in China. The Marine business contributed S$147.7 million in net profit in 1H2013, a decrease of 5% compared to S$155.3 million in 1H2012 primarily due to lower interest income and lower contribution from associates. The Urban Development business recorded a net profit of S$10.3 million compared to S$12.3 million in 1H2012.
For 1H2013, return on equity (annualised) for the Group was 14.6% and earnings per share amounted to 19.2 cents. Economic value added was a positive S$275.0 million while cash and cash equivalents stood at S$2.1 billion.
In the second quarter of 2013 (2Q2013), Group net profit was S$165.4 million compared to S$190.7 million in 2Q2012, while turnover was S$2.5 billion compared to S$2.7 billion. The Utilities business recorded net profit of S$111.9 million for the quarter, while the Marine and Urban Development businesses posted net profit of S$75.7 million and S$3.6 million respectively.
Tang Kin Fei, Group President & CEO of Sembcorp Industries, said, “In 1H2013, our Utilities business continued to grow, underpinned by good performance from our overseas operations. We have a strong growth pipeline and have continued to make strides in strengthening our operational and technological capabilities. In Singapore and the UK, we embarked on new energy-from-waste projects, while in the Middle East we expanded our footprint with a joint venture to develop centralised utilities facilities in Duqm, Oman. In addition, to strengthen our capabilities in industrial wastewater treatment, we invested and entered into a strategic partnership with technology solutions firm, Biowater Technology. Meanwhile, our Marine business grew its orderbook to a strong S$14.4 billion, including S$3.5 billion worth of new contracts secured this year. Sembcorp, underpinned by our healthy pipeline of projects and orderbook, continues to be well-positioned to deliver sustainable long-term growth.”

Strong rig demand

The company’s Marine business has secured contract orders worth a total of S$3.5 billion (excluding repairs) since the start of the year, growing the Group’s net orderbook to S$14.4 billion, with completion and deliveries extending till 2019. Demand for rigs is expected to remain strong, however, competition from the Chinese and Korean yards will impact margin. Despite the challenging shipping market environment, there is continued demand for ship repairs in niche segments. The new yard at Tuas is commencing commercial operations in August 2013 and the construction of the Brazil yard is on track.