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9 Points Investors Should Know From Sembcorp Industries Limited’s Latest Earnings Update

Last week, Sembcorp Industries Limited (SGX: U96)  released its 2018 first quarter earnings. As a quick introduction, Sembcorp Industries is a bona-fide conglomerate with four major business segments: Utilities; Marine; Urban Development; and Others. The Marine segment’s contribution comes from Sembcorp Industries’ 61% ownership stake in Sembcorp Marine Ltd (SGX: S51).

Here are nine important things to know about Sembcorp Industries’ latest results:

1. Revenue for the reporting quarter jumped by 30% year-on-year to S$2.76 billion.

2. But, EBITDA (earnings before interest, taxes, depreciation, and amortization) for the quarter actually fell by 17% year-on-year to S$286 million.

3. Profit from operations for the quarter declined harder, as it came in at S$213 million, 21% lower compared to a year ago.

4. Ultimately, Sembcorp Industries’ net profit for the quarter sank by 34% year-on-year to S$77 million.

5. In the reporting quarter, operating cash flow was S$191 million, up 61.4% from S$118 million a year ago. The improvement was mainly due to better management of working capital.

6. Sembcorp Industries’ net debt increased from S$7.16 billion at end-2017 to S$7.29 billion as of 31 March 2018.

7. The Utilities segment reported a 14% year-on-year increase in revenue to S$1.51 billion for the reporting quarter. The Marine segment did even better with a 58% jump in revenue to S$1.18 billion, but it had benefitted from an accounting rule change. Excluding the effect of the adoption of the new accounting rule, the Marine segment’s revenue would have been S$858 million instead, an increase of 15% year-on-year.

8. Sembcorp Industries’ annualised return on equity was just 4.3% at 2018’s first quarter. Its net asset value grew 3.2% year-on-year to S$3.90.

9. In its earnings update, Sembcorp Industries had shared a succinct but useful comment on its outlook:

“The market environment is expected to remain challenging in 2018. A broader-based global recovery is underway, aided by a rebound in investment and trade. As the Group repositions its businesses for the future, it is confident that it is well-placed to benefit from the market’s recovery.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.