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Sembcorp Delivers Strong 1H2022 Performance – EQ Mag Pro

Sembcorp Delivers Strong 1H2022 Performance – EQ Mag Pro

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  • H2022 net profit before exceptional items up 94% at S$490 million

  • Significant growth achieved in renewables portfolio

For the first half of 2022 (1H2022), Sembcorp Industries recorded a turnover of S$4.8 billion, up 45% from S$3.3 billion in 1H2021. Group net profit before exceptional items increased 94% to S$490 million, with higher contributions from the Renewables and Conventional Energy segments.

Net profit for the Renewables segment increased to S$76 million from S$24 million in 1H2021. The stronger performance was driven by contributions from SDIC New Energy and Shenzhen Huiyang New Energy in China, post completion of these acquisitions in January 2022 and June 2022 respectively. Wind assets in India and solar operations in Singapore also performed better. Including the 0.9GW of renewables projects secured in 1H2022, gross renewables capacity (installed and under development) totalled 7.1GW. Net profit before exceptional items from the Integrated Urban Solutions segment remained steady at S$62 million, compared to S$63 million in 1H2021.

The Conventional Energy segment posted a net profit of S$397 million, an increase of 115% from net profit before exceptional item of S$185 million in 1H2021. The higher contribution was mainly due to higher electricity price in Singapore and India, as well as realised gains from favourable gas hedges entered into in 2021.

FINANCIAL SUMMARY

INTERIM DIVIDEND

In view of the strong underlying performance, the board of directors announces an interim dividend of 4.0 cents per ordinary share, which will be paid on August 23, 2022.

GROUP OUTLOOK

The Group performed well in the first half of 2022 (1H2022), mainly driven by the Conventional Energy segment due to higher electricity price in Singapore and India, as well as realised gains from favourable gas hedges in Singapore.

Underlying earnings for the Conventional Energy segment in the second half of the year (2H2022) are expected to remain strong, if market conditions seen in 1H2022 remain. Performance of the Renewables segment in 2H2022 will be underpinned by a full half-year contribution from the China renewables portfolio acquired in 1H2022.

Corporate costs are expected to increase due to rising interest rates and higher borrowing costs arising from the acquisitions of SDIC New Energy and Shenzhen Huiyang New Energy.

Full year results for the Group are expected to be significantly higher than 2021.

Notwithstanding the strong performance, the global economic outlook continues to be uncertain. Significant volatility in the commodity markets and supply chain risks caused by the ongoing geopolitical tensions, as well as tighter monetary policy to control inflation have increased the risk of a global recession, which could negatively impact performance.

The Group will continue to focus on the transformation of its portfolio from brown to green and the achievement of its 2025 targets.

Source: sembcorp
Anand Gupta Editor - EQ Int'l Media Network