Semb Corp Q1 net profit grows 18.8% to $158.8m; utilities business also improves

By VINCENT WEE

SEMBCORP posted an 18.8 per cent rise in first quarter net profit to $158.8 million on a 12.1 per cent increase in turnover to $2.41 billion as strong results from the marine sector continued to flow in.

Fluid prospects: Sembcorp's environment business saw net profit more than double to $3.2 million

For the first quarter, marine's share of net profit rose 23 per cent to $91.1 million from $74.0 million previously, while utilities' contribution increased 10 per cent from $51.1 million to $56.2 million.

This was mainly due to higher gross profits achieved from rig building, offshore and conversion projects while utilities' gains came through better performances from Singapore, China and the UK. Margins for the Singapore operations increased due to higher electricity prices achieved during the quarter and the China operations also performed better, mainly due to contributions from the Shanghai Cogen unit which benefited from higher volume generated and higher margins.

Contributions from overseas operations now comprise 39 per cent of utilities' net profit, Sembcorp said, with earnings from China, Vietnam and the UAE growing by a fifth to $11.6 million in the first quarter.

Turnover from marine, however, was almost flat at $1.36 billion although revenue from utilities rose 36 per cent to $949.1 million.

Among the smaller divisions, the environment business saw net profit more than double to $3.2 million as a result of higher sales tonnage and selling price of recyclables while the industrial park business boosted net profit 22 per cent to $4.4 million because of increased land sales and recovery of receivables. Earnings per share went up from 7.5 cents to 8.9 cents.

'Sembcorp's healthy profit growth in this first quarter reflects the strong fundamentals of our businesses,' said group president and CEO Tang Kin Fei. 'With globalisation and urbanisation, the world's demand for energy, water and other urban solutions continues to grow. Backed by a sound balance sheet, we will continue to build on our strength and capitalise on opportunities to expand our businesses internationally,' he said.

Sembcorp is in the midst of a takeover bid for water and wastewater services provider Cascal.

For the full-year, Sembcorp expects to produce steady results from the utilities business while the marine business should see a satisfactory year. Overall, the group said that it remains committed to delivering a credible operating performance and satisfactory earnings in FY10.

Sembcorp also separately announced that group CFO Lim Joke Mui would be retiring on June 30 and would be succeeded by current deputy group CFO Koh Chiap Khiong.

Mr Koh worked in the group's utilities business from 1998 to 2005, when he left to join PowerSeraya Limited as CFO. In August 2008, he was identified as a suitable successor to Mrs Lim and was recruited back to Sembcorp as deputy group CFO.

Mr Koh brings with him extensive experience in finance, tax, treasury management and audit in various industries and has more than 10 years of management experience in infrastructure businesses and a very strong knowledge of the energy and water sectors.