10 Quick Takeaways From Sembcorp Industries Limited’s 2018 Second-Quarter Results

On 3 August, Sembcorp Industries Limited (SGX: U96) released its 2018 second-quarter earnings update. As a quick introduction, Sembcorp Industries is a conglomerate with four major business segments: Utilities; Marine; Urban Development; and Other Businesses. The Marine segment is made up of Sembcorp Industries’ 61% ownership stake in the Singapore-listed marine engineering firm, Sembcorp Marine Ltd (SGX: S51).

Here are 10 things investors should know about Sembcorp Industries’ latest results:

1. Revenue for the reporting quarter improved by 47% year-on-year to S$3.34 billion.

2. EBITDA (earnings before interest, taxes, depreciation, and amortisation) fell by 19% year-on-year to S$268 million.

3. Profit from operations declined by 13% year-on-year to S$192.1 million, driven mainly by weaker performance in the Marine segment.

4. However, net profit for the quarter jumped 47% year-on-year to S$82 million.

5. The operating margin for the reporting quarter declined from 9.6% a year ago to 5.7%. Similarly, the EBITDA margin fell from 14.5% last year to 8.0% this year.

6. In the reporting quarter, operating cash flow was a negative S$42 million, up from a negative S$320 million seen in the corresponding quarter last year. The improvement was mainly due to better working capital management.

7. Sembcorp Industries’ net debt increased from S$7.2 billion as at end-2017 to S$8.3 billion as at 30 June 2018.

8. The Utilities segment reported a 6% year-on-year increase in revenue to S$1.7 billion for the reporting quarter. Similarly, the Marine segment reported 151% year-on-year increase in revenue to S$1.6 billion.

9. Return on equity on an annualised basis was 4.5% whilst net asset value grew 5.3% year-on-year to S$3.95.

10. Here’s a brief comment by Sembcorp Industries on its outlook:

“The market environment is expected to remain challenging in 2018. While a broader based global recovery is underway, rising trade and geopolitical challenges could potentially increase volatility and dampen global growth. The group is confident that it has the right strategies and capabilities for the future”

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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.