Sembcorp reports net profit drop citing "difficult" market conditions

Sembcorp Industries has reported a fall in net profit of 47 per cent to S$193.5 million ($144.2 million) for the first half of 2016. The decrease partly reflects a gain of S$54.7 million ($40.8 million) on selling UK water business Bournemouth Water in the first half of 2015, as well as a "difficult" current market environment.

Turnover decreased by 21 per cent to S$3.7 billion ($2.7 billion).

Sembcorp’s utilities segment, a provider of energy, water, onsite logistics, and solid waste management to industrial and municipal customers, recorded a drop in net profit of 31 per cent to S$149.9 million ($111.7 million), largely reflecting the divestment. The marine business contributed net profit of S$40.6 million ($30.3 million), down 69 per cent, and the urban development business, S$7.4 million ($5.5 million), lower by 43 per cent, for the first half.

“The current market environment remains difficult. Sembcorp has built a strong foundation in emerging markets, and solid capabilities in the energy, water, marine, and offshore sectors. We are well placed to navigate the challenges ahead, and to create and deliver long-term value and growth,” said group president and chief executive Tang Kin Fei.

Sembcorp’s utilities segment supplies desalinated and reclaimed water for drinking and industrial use, as well as wastewater treatment services; and in the energy sector, power generation and retail, process steam production and supply, and natural gas import, supply and retail.

The group co-owns and operates a combined power and desalination plant in Fujairah, UAE, deploying dual media filtration, two-pass seawater reverse osmosis, and multi-stage flash technologies to produce 591,800 m3/d of water.

Additionally, it owns and operates a power and desal plant in Salalah, Oman, producing 69,000 m3/d of desalinated water.