SINGAPORE - Sembcorp Industries’ gas and related services segment is expected to remain robust, while its renewables business is also expected to perform well in the days ahead, the group said as it released its full-year results on Feb 20.

Net profit in the second half of its 2023 financial year rose 15 per cent to $412 million, up from $358 million in the same period in 2022.

For the full year, net profit after exceptional items and loss from a discontinued operation climbed 11 per cent to $942 million, an increase from $848 million in 2022.

The group proposed a final dividend of eight cents per share. Together with an interim dividend of five cents paid in August 2023, this brings the group’s total dividend for the year to 13 cents per share, versus 12 cents in 2022.

Sembcorp group chief financial officer Eugene Cheng called it a “watershed year” for Sembcorp Industries during a briefing over the results, as before exceptional items, this is the highest net profit that the group has achieved in its operating history.

Sembcorp chief executive Wong Kim Yin said the confidence level of the executives in the group’s future earnings potential is much stronger than the year before.

“It manifests in the fact that we are prepared to come up and say our ordinary dividend shall be 13 cents going forward,” he said.

“That means what we’re saying is that next year, you would expect our investors to expect us to sustain it, so I think it’s a very important signal.”

He added that the group is confident about earnings and cash flow and can fund its growth for its brown to green strategy.

“Brown” refers to less environmentally friendly activities, while “green” refers to environmentally friendly measures.

“Moving forward, we are putting money into renewables and all our renewables are backed by long-term contracts. The team has put in this very deliberate, very concerted effort to have shifted the risk profile of our entire portfolio from what it was when I first came into the company,” Mr Wong said.

Sembcorp said in a statement that the group performed well in 2023, underpinned by the strong contribution of the gas and related services segment, on the back of better performance in the Singapore power market and earnings growth in the renewables segment.

It added that earnings in the gas and related services segment are expected to remain robust, underpinned by the group’s significantly contracted position.

“Gas and related services contribution will be offset by a planned major maintenance in Singapore to ensure continued efficiency and high reliability of our asset,” Sembcorp said.

It added that income contribution from the Phu My 3 power plant in Vietnam will also cease at the end of February.

Meanwhile, the renewables segment is expected to perform well as more greenfield projects are commissioned and brownfield acquisitions are completed progressively in the course of the year, Sembcorp said.

Brownfield projects are those that happen when a firm uses an existing facility, while greenfield projects see the firm building its own from scratch.

Mr Wong said: “To drive growth beyond 2028, we must continue to advance our decarbonisation pathways. These are some of the new initiatives that have a longer-term horizon and this includes the origination of low-carbon electricity through regional power inputs, low-carbon feedstock, and low-carbon technologies.”

He noted that during the year, the group received conditional approval to import 1.2 gigawatts (GW) of low-carbon electricity from Vietnam to Singapore, which is the largest import licence issued by the Energy Market Authority.

The outlook of the integrated urban solutions segment is also expected to remain stable.

Better performance for the gas and related services segment in 2023 was mainly driven by higher power prices in Singapore, Sembcorp said.

During the year, the group secured multiple long-term power purchase agreements for its Singapore generation assets, ensuring a strong and stable stream of operating cash flow and earnings certainty for the segment, it added.

Meanwhile, the renewables segment grew, driven by contributions from acquisitions in China and India, as well as higher contributions from energy storage and solar operations in Singapore.

“Since end-2022, we have secured 4GW of gross renewables capacity through acquisitions and organic growth across key markets, bringing the group’s renewables capacity to 13.8GW,” Sembcorp said.

Mr Wong said: “We are encouraged by our strong performance in 2023 and will focus on the execution of our 2024 to 2028 strategy, to transform our portfolio from brown to green and drive energy transition.”

Shares of Sembcorp closed at $5.81 on Feb 20, an increase from the previous close of $5.75.