Sembcorp Profit Plummets
Sembcorp Reports 72% H1 Net Profit Decline Due to Acquisition Costs and FX
Key Points
The renewables segment saw an underlying net profit drop of 48% to S$69 million, driven by continued curtailment, the loss of value-added tax refunds, a transition to market-based pricing in China, and weaker wind and solar resources reducing generation output.
Gas and related services underlined segment profit declined 14% to S$285 million, attributed to lower earnings in the UK after the exit of a customer and softer generation spreads in Singapore.
EBITDA fell 3% year on year to USD 768 million, while cost of sales surged 40% to USD 3.15 billion, highlighting margin pressure despite higher turnover.
Profit before tax declined by about 62% year on year to USD 246 million, underscoring the disparity between top-line gains from Alinta consolidation and cost-driven earnings pressure.
Sembcorp Industries posted a 72% drop in net profit to S$150 million for the first half of 2025, weighed down by S$155 million in one-off costs tied to its Alinta Energy acquisition, according to Seeking Alpha. Strip out those exceptional items, and underlying net profit still fell 25% to S$369 million.
Despite the earnings hit, revenue rose 28% to S$3.77 billion, boosted by higher energy prices and Alinta's added revenues. Sembcorp also lifted its interim dividend 22% to S$0.11 per share, a sign management remains confident in the road ahead, Head Topics reported.
Alinta Deal Costs and FX Losses Crush Reported Profit
The gap between reported and underlying profit tells the real story. Sembcorp booked S$155 million in transaction costs from buying Alinta Energy. On top of that, a S$57 million foreign-exchange loss on a deferred payment note and a S$10 million fair-value loss on energy derivatives dragged earnings further. Only a S$3 million gain from selling a water business in China provided any offset, according to Seeking Alpha.
Profit before tax fell roughly 62% year on year to USD 246 million. EBITDA — earnings before interest, tax, depreciation, and amortisation — dipped 3% to USD 768 million. Cost of sales surged 40% to USD 3.15 billion, squeezing margins even as the top line grew, Seeking Alpha noted.
Renewables and Gas Segments Both Lose Ground
Sembcorp's renewables segment was the hardest hit among its business units. Underlying net profit there fell 48% to S$69 million. The culprits were multiple: power output was curtailed, China removed value-added tax refunds, pricing shifted to market rates, and wind and solar conditions were simply weaker, Head Topics reported.
Gas and related services also slipped, with segment profit down 14% to S$285 million. That decline came mainly from the UK, where a key customer left, and from softer generation spreads in Singapore. The integrated urban solutions segment fell 16% to S$62 million after contributions from SembEnviro dropped out of the results entirely.
Vietnam Industrial Parks Offer a Bright Spot Amid Declines
Not everything went the wrong way. Sembcorp secured six new industrial park projects in Vietnam during the half, adding to its integrated urban solutions pipeline. The group's overall revenue growth was also real — the 28% rise to S$3.77 billion reflects genuine business expansion, not just accounting changes, according to Moomoo.
Management Bets on a Stronger Second Half
Sembcorp's leadership pointed to a better second half ahead. Alinta will contribute a full period of earnings. Gas and related services are expected to recover. Higher land sales should also help. Renewables will face some ongoing headwinds but new installed capacity is expected to provide a partial offset, Seeking Alpha reported.
The 22% dividend increase to S$0.11 per share backs up that confidence with cash. Even with a tough first half, management chose to reward shareholders rather than hold back. That move signals Sembcorp sees the Alinta-related pain as short-term, not structural, Head Topics noted.
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