10 Quick Things Investors Should Know About Sembcorp Industries Limited’s Latest Earnings
In late February, Sembcorp Industries Limited (SGX: U96) released its 2017 fourth quarter and full year earnings update. As a quick introduction, Sembcorp Industries is a bona fide 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 2017 increased by 5.5% to S$8.346 billion.
2. EBITDA (earnings before interest, taxes, depreciation, and amortization) declined by 4% to S$1.264 billion.
3. Profit from operations was down by 13% to S$795 million, driven mainly by weaker performance in the Marine segment.
4. In all, net profit attributable to shareholders for the whole of 2017 fell by 41.6% to S$230.77 million.
5. The conglomerate’s gross margin declined from 14.0% in 2016 to 11.3%. Similarly, its EBITDA margin fell from 16.6% to 15.1% this year.
6. Operating cash flow for 2017 was S$650.34 million, down from S$872.07 million in 2016, mainly due to the lower profit and negative changes in working capital.
7. The conglomerate’s net debt declined slightly from S$7.338 billion at end-2016 to S$7.161 billion at end-2017.
8. In 2017, the Utilities segment reported a strong 38% increase in revenue to S$5.67 billion. Urban Development and the Other Businesses segments also did well during the year; the former saw its revenue grow by 10% to S$8 million, while the former experienced a 14% increase in revenue to S$280 million. The Marine segment was the big laggard, as its top-line fell by 32% to S$2.388 billion.
9. Sembcorp Industries proposed a final dividend of 2.0 cents per share. Together with the interim dividend of 3.0 cents, the total dividend for 2017 was 5.0 cents. In 2016, the conglomerate’s dividend was 8.0 cents per share (comprised of an interim dividend and final dividend of 4.0 cents per share each).
10. In Sembcorp Industries’ latest earnings update, Neil McGregor, the president and CEO of the conglomerate, summarized the performance in the year:
“2017 was a challenging year for our business sectors. We fully recognise the challenges we face, and are committed to addressing them head-on to lift our performance and returns. These challenges, together with market and industry disruptions, offer the opportunity for us to take decisive steps and reposition Sembcorp for success in a rapidly changing world.”