Sembcorp Industries Limited’s Latest Earnings: 5 Key Things to Know About its Utilities Business

Sembcorp Industries Ltd (SGX: U96) hosted its second-quarter earnings briefing last week.

Sembcorp Industries has three business segments, namely utilities, marine, and urban development and others. The first two are by far the most important. The conglomerate also has majority ownership of Sembcorp Marine Ltd (SGX: S51), which falls under the marine segment.

Let’s take a look at what was shared on its utilities segment. For the first three points, go here.

The home team

Source: Sembcorp Industries’ earnings presentation

Singapore remains a key contributor to the utilities business. Sembcorp Industries chief Neil McGregor said:

“Singapore operations, which contributed 50% of Utilities’ earnings, performed well, delivering a net profit of 29% due to strong performance from its centralized utilities and gas businesses. While competition in the power market continues to be intense, our diversified Utilities operations do provide resilience.”

McGregor also touched on two new projects in Singapore, which deals in rooftop solar energy:

“We also strengthened our green energy capabilities by adding rooftop solar facilities in Singapore to our growing international renewable energy portfolio.

This move into the emerging distributed solar energy market in Singapore complements our local electricity generation and retail capabilities. It also reinforces our commitment to greener energy for Singapore as the market here moves towards full retail competition.”

McGregor had earlier said that the utilities business is facing disruption and that new innovations have emerged. The move to broaden its revenue sources could be important in this context.  

Growth on the horizon

McGregor also highlighted the progress in Myanmar and Bangladesh:

“Our gas-fired projects in Myanmar and Bangladesh are progressing well. On the commercial and financing front, long-term power purchase agreements have been signed and project financing secured for both projects.

On track for completion in 2018 and 2019, respectively, these projects put us in a strong position in 2 growth markets which are amongst countries with the lowest power consumption as well as installed capacity per capita worldwide.”

Myanmar’s Myingyan power plant is considered over 80% complete and is slated to start operations by the second quarter of 2018. Meanwhile, Bangladesh’s Sirajganj Unit 4 is 40% complete. The latter has a target to begin combined-cycle mode operations by the second-half of 2019.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.