However, revenue fell 33% due to lower turnovers from its energy and marine units.
Sembcorp Industries’ profit jumped 20% YoY in Q2 to $98m from $82m over the same period last year even as revenue crashed 33% YoY to $2.1b in Q1 from $3.16b in the previous year.
For the first half of the year, profits climbed 20% YoY to $191m from $159m last year, whilst revenue fell by 21% YoY to $4.85b compared to $6.1b in H1 2018.
The firm attributed the higher profit due to the lower cost of sales, which fell 33% YoY to almost $2.11b in Q2 from $3.55b in Q2 2018. This was supported by higher depreciation and amortisation in Q2 2019 related to the UK Power Reserve (UKPR) and accelerated depreciation of certain property, plant and equipment at the yard at Tanjong Kling Road. The company also recorded lower tax expenses at $15m in the second quarter, a 38% YoY fall from $24m in Q2 2018.
The decline in revenue was attributed to lower turnover from the energy business, which fell by 6% YoY to $1.56b, mainly attributed to the lower provision of energy products and related services from Singapore and India and lower construction revenue recognition. The revenue decline was also partly due to the absence of contribution from South Africa post-divestment.
Revenue from the marine business also plunged by 55% YoY to $731m, mainly due to lower revenue recognition from rigs and floaters and offshore platform projects, mitigated by higher repair and upgrade revenue. The marine business booked a loss of $6m in H1 2019 compared to $32m net loss in H1 2018, attributed to the continued lower overall business volume offset by margin recognition from newly secured production floater projects and the delivery of a rig.
“The Energy and Urban businesses continue to underpin the Group’s performance. The market
environment continues to be challenging for the offshore and marine sector and Sembcorp Marine is expecting full year losses,” the release stated.
On the other hand, the company expects the energy business to continue improving driven by a positive long-term outlook for the Indian power market. In Singapore, completion of the sale of certain utilities facilities to ExxonMobil Asia Pacific is expected by end-2019, although major maintenance shutdowns for the power generation assets in Singapore will take place in the second half of the year.
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