Published February 27, 2009

Sembcorp Q4 net falls 33.6%

But full-year net profit dips just 3.6% while revenue rises a healthy 15.2%

By VINCENT WEE

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SEMBCORP Industries yesterday reported a 33.6 per cent fall in net profit to $100.85 million for the fourth quarter ended Dec 31, 2008 despite a 6.6 per cent rise in turnover to $2.69 billion.

Related links: Click here for SembCorp's news release Financial statements

But for the full year, net profit dipped just 3.6 per cent to $507.1 million from $526.2 million the preceding year while revenue still showed a healthy 15.2 per cent rise to $9.93 billion.

The full year saw an exceptional charge of $26.9 million due to Sembcorp's share of the forex losses of offshore and marine unit Sembcorp Marine stemming from the settlement of unauthorised transactions in the fourth quarter. FY08 basic earnings per share likewise fell to 28.5 cents from 29.57 cents. A final dividend of 11 cents per share has been proposed.

For Q4, share of losses of associate came to $24.73 million, against a profit share of $28.9 million for Q4'07. For the full year, the profit share was $80.87 million, down from $96.85 million. The changes were mainly due to Cosco Shipyard Group.

For FY08, income tax expense rose by half to $131 million as the group had enjoyed a tax write-back of $48 million the previous year. The utilities and marine businesses continued to be Sembcorp's main profit drivers, together accounting for 92 per cent of group net profit. For the full year, net profit from marine rose 32 per cent to $290.6 million, mainly due to higher revenue (12 per cent up to $5.06 billion) and operating margins from its rig building and ship repair businesses.

Utilities' net profit, however, fell 13 per cent to $200.3 million although turnover rose 20 per cent to $4.48 billion for FY08. The Singapore and UK operations contributed $130.8 million and $67.6 million respectively but profits from UK operations fell 37 per cent from $106.8 million, impacted by lower profit margins and depreciation of sterling which further eroded its contribution in Singapore dollar terms. This translation impact amounted to around $10 million, Sembcorp said.

The other two businesses continued to struggle. The environment business' FY08 turnover rose 4 per cent to $213.8 million, mainly due to higher turnover at its paper recycling division, but net profit plunged 84 per cent to $2.1 million due to higher operational costs and lower recyclables. Full-year turnover at the industrial parks business fell 30 per cent to $16.2 million mainly due to the divestment of Wuxi Garden City Mall in May 2007. Net profit was 7 per cent lower at $31.5 million.

'Sembcorp delivered a credible set of results for the year despite the rapid deterioration of the global economic environment in the last few months of 2008,' said group president and CEO Tang Kin Fei. 'The year ahead will not be easy with the global economic slowdown and tightening credit markets,' he added.

Sembcorp shares closed five cents higher at $2.14 yesterday.