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Sembcorp reports 1HFY2023 earnings of $530 mil, 8% higher y-o-y

Felicia Tan
Felicia Tan • 4 min read
Sembcorp reports 1HFY2023 earnings of $530 mil, 8% higher y-o-y
Solar assets jointly owned by Sembcorp and Hunan Xingling New Energy in Hunan, China. Photo: Sembcorp
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Sembcorp Industries U96 -

has reported earnings of $530 million for the 1HFY2023 ended June 30, 8% higher than the earnings of $490 million in the same period the year before.

Earnings – net profit – from continuing operations before exceptional items rose 55% y-o-y to $602 million as net profit for Sembcorp’s renewables segment, sustainable solutions, conventional energy and other businesses rose on a y-o-y basis. This was offset by the lower net profit from integrated urban solutions and corporate.

During the six-month period, the group recognised exceptional items of $6 million, which includes divestment gains of $5 million from the sale of its water businesses in Indonesia and $1 million negative goodwill arising from the acquisition of a 49% joint venture in the solar business in Vietnam.

The renewables segment saw net profit before exceptional items of $117 million, up 54% y-o-y, thanks to contributions from SDIC New Energy Investment and Sembcorp Huiyang New Energy (Shenzhen) in China as well as acquisitions that were completed in the 1HFY2023. Gross installed renewables capacity as at June 30 was 8.6GW, compared to 5.4GW at June 30, 2022. Gross renewables capacity (installed and under development) totalled 11.9GW.

Net profit before exceptional items for the integrated urban solutions segment fell by 23% y-o-y to $48 million mainly due to lower commercial and residential land sales in the Vietnam urban business, as well as lower earnings from the waste management business in Singapore.

The conventional energy segment posted a net profit before exceptional items of $435 million, 47% higher y-o-y mainly due to higher electricity prices in Singapore.

See also: KSH sinks into red with net loss of $31.5 mil for FY2024

During the 1HFY2023, loss from discontinued operations stood at $78 million, down from the profit of $101 million in the same period the year before. The loss was due to the disposal of Sembcorp Energy India Limited (SEIL) after the realisation of an accumulated currency translation loss recognised in the foreign currency translation reserve and a gain in capital reserve and other reserves.

1HFY2023 turnover fell by 6% y-o-y to $3.66 billion due to lower contributions from the conventional energy segment on the back of lower gas sales revenue. This was mitigated by higher contributions from the renewables segment thanks to the full half-year contribution from Sembcorp Huiyang New Energy in China, a new energy storage system in Singapore and the acquisition of Vector Green Energy in India. Sembcorp Huiyang New Energy was acquired in June 2022 while the new energy storage system was commissioned in the 2HFY2022. The acquisition of Vector Green was conducted in the 1HFY2023.

Cost of sales fell by 17% y-o-y to $2.83 billion.

See also: Hiap Seng reports earnings of $20.1 mil for FY2024, a reversal from losses a year ago

Gross profit surged by 71% y-o-y to $832 million.

Share of results of associates and joint ventures (JVs) rose by 10% y-o-y to $146 million from contributions from newly acquired investments in Hunan Xingling New Energy, Beijing Energy Sembcorp (Hainan) International Renewables Company Limited (BESH), as well as better performance from SDIC. Hunan Xingling contributed $9 million while BESH contributed $4 million. SDIC contributed $6 million. The better performance was offset by lower earnings contribution from land sales in the urban business.

Earnings per share (EPS) stood at 29.21 cents on a fully diluted basis.

As at June 30, cash and cash equivalents stood at $849 million.

“The group continued to perform well in the first half of the year with strong earnings from the conventional energy and renewables segments. With 2.1GW of renewables projects added in 1HFY2023, our gross renewables capacity has reached 11.9GW with 8.6GW of capacity installed and 3.3GW under development. The group remains focused on the execution of our brown to green transformation strategy and creating long-term value for our stakeholders,” says Wong Kim Yin, group president and CEO of Sembcorp.

In its outlook statement, the group adds that underlying earnings for the FY2023 are expected to be higher y-o-y. However, a projected slower global growth could weigh down on the economy and impact the group’s business performance.

For the 1HFY2023, the group has declared an interim dividend of 5.0 cents per share, which will be paid on Aug 22.

Shares in Sembcorp closed 7 cents higher or 1.27% up at $5.60 on Aug 3.

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