Sembcorp Industries reversed to a $131m net loss in H1 2020, from a $191m profit in H1 2019, the company announced. At the same time, profit slipped 27% YoY to $3.52b, from $4.85b in the first half of 2019.
The impact of the pandemic on the global economic outlook and low energy prices have affected its assessment of the recoverable amount of certain investments and assets, the company said.
Exceptional items during the period, including impairments of these investments and assets, amounted to a negative $191m. Without these, underlying group net profit would be $60m.
Underlying profit for the firm's energy business is at $156m. Including exceptional items totalling a negative $161m, the business posted a net loss of $5m compared to a net profit of $177m in H1 2019.
Likewise, the net loss for its marine business expanded to $117m, from $6m in H1 2019, no thanks to the pandemic delaying project executions, higher costs recognised for rigs & floaters and specialised shipbuilding projects, and lower margin recognition from offshore platforms. This was partly offset by profit from repairs and upgrades.
Meanwhile, its urban business delivered a 111% net profit growth from $18m to $38m over the same period, driven by strong land sales achieved at Sino-Singapore Nanjing Eco Hi-tech Island, China and Kendal Industrial Park, Indonesia.
With the Singapore economy in recession and oil prices in sharp decline, The Group expects to incur losses for the full year due to the expected continuing losses at Sembcorp Marine and exceptional items recorded in H1 2020.
"Notwithstanding the adverse business conditions, the group expects to maintain positive operating cash flow in 2020 underpinned by its long-term contracts and the underlying performance of its Energy and Urban businesses," Sembcorp said.