Sembcorp Industries net profit soars 40.4% to S$254.4m

Revenue climbed 30.8%, as expected.

Sembcorp Industries delivered results within view, according to OCBC, with 30.8% YoY rise in revenue to S$2.97b and a 40.4% increase in net profit to S$254.4m in 3Q13, such that 9M13 revenue and net profit accounted for about 74% and 78% of OCBC's full year estimates, respectively.

"Stripping out one-off items, we estimate core net profit in 9M13 to be S$528.3m, accounting for about 71% of our full year estimate," added the research firm.

Utilities saw a decrease of 7% in revenue to S$1.28b in 3Q13, mainly due to lower electricity sales in Singapore and lower High Sulphur Fuel Oil prices.

Sembcorp Industries managament said spark spreads were down 19% YoY in 3Q13. It added that China continued to register good revenue growth from S$35m in 2Q13 to S$45m in 3Q13, but on the UK side, there was an impairment of Teesside operations, mainly for power and steam assets.

Sembcorp Industries is seeking to re-base existing contracts to recover costs, as well as to reflect current operating conditions, and OCBC sees no further provisions on this front in 4Q13

Also, With the listing of Sembcorp Salalah and SCI’s corresponding drop in its stake from 60% to 40%, the former will now be accounted for as an associate of the group, said OCBC.

"The deconsolidation has also resulted in SCI turning from a net debt position of S$468m as at Jun 2013 to a net cash position of S$494m in Sep 2013," the research firm added.