SembCorp Industries' net profit crosses $1b mark

CONGLOMERATE SembCorp Industries has crossed the $1 billion profit mark, thanks to one-off gains of more than $650 million.

Full-year net profit surged 239.5 per cent to a record $1.03 billion.

With the bumper result, the company proposes to pay a net dividend that is more than five times what it paid last year.

The exceptional gains included a $463.3 million profit from the sale of its 60 per cent stake in SembCorp Logistics, as well as a $83.1 million write-back of impairment for property, plant and equipment.

The company has declared a net dividend of 28 cents a share, up from 5.2 cents last year. The higher payout comprises a final net dividend of 12 cents and a special dividend of 16 cents a share.

But reflecting SembCorp Industries' actual operations, revenue grew a more modest 29.7 per cent to an all-time high of $7.49 billion for the year ended Dec 31.

Its two key business segments - utilities and marine - contributed 95 per cent of total turnover.

Utilities contributed $3.59 billion, up 10 per cent, as its Singapore and British operations continued to do well, while the prices of high-sulphur fuel oil (HSFO) remained high.

Wholesale market electricity prices usually rise in tandem with increases in the price of HSFO.

Turnover at SembCorp Marine grew 68 per cent to $3.54 billion due to strong growth in its rig-building and ship-repair businesses.

However, its environmental management unit turned in a loss of $18.4 million, which also saw revenue contracting 3 per cent to $210.1 million.

The group said impairment made for the fixed assets and provision for contracts related to the local municipal waste collection sector contributed to the unit's poor performance.

Looking ahead, SembCorp Industries said its utilities operations in Singapore is expected to perform better this year. In addition, the Wilton 10 - a 30MW biomass power plant in Britain - is scheduled to start operations in the second half of this year.

The marine division, which has an order book of $7.1 billion with completion and deliveries till 2010, will continue to benefit from the strong ship-repair demand and positive outlook for the rig-building sector. New contracts secured so far this year already amounts to $1.7 billion.

In the past year, the group said it had successfully divested itself of SembCorp Logistics and SembCorp Engineers and Constructors and streamlined the its focus on utilities and marine & offshore engineering businesses.

It also listed its Riau island investments through Gallant Venture, which is now the largest owner and operator of industrial parks in Batam and Bintan.

'We are now more focused and are poised for further growth with sound fundamentals in our utilities and marine and offshore engineering businesses,' said Mr Tang Kin Fei, SembCorp Industries' group president and chief executive.

Earnings per share rose to 58.51 cents from 17.14 cents previously. But excluding exceptional items, that figure would have been 21.57 cents, an improvement from 15.74 cents.

Net asset value per share stood at $1.59 as at Dec 31, up from $1.14.

SembCorp Industries' shares closed unchanged at $4.68 yesterday.

arthurp@sph.com.sg