Sembcorp Industries 1H2025 Financial Results: A Resilient Half Amid Macro Uncertainty

Sembcorp Industries released its results for the first half of 2025, highlighting resilient performance amid challenging macroeconomic conditions, currency headwinds, and sectoral shifts. The Group’s diversified portfolio, with strong exposure to investment-grade markets and a growing renewables segment, underpinned its defensive earnings profile.

Key Financial Metrics and Performance Table

Historical Performance and Segment Analysis

• Revenue: Declined 8% YoY, mainly due to lower turnover from Gas and Related Services (lower Singapore pool prices and the absence of SembEnviro contribution after divestment). This was partially offset by higher gas sales and increased renewables capacity.
• Net Profit: Fell marginally by 1% YoY. While Renewables saw a 27% YoY net profit increase (thanks to strong wind resource in India and new project additions), this was offset by lower gas spreads, FX losses, and the absence of profits from Vietnam’s Phu My 3.
• EBITDA & Adjusted EBITDA: EBITDA dropped 6% YoY, but Adjusted EBITDA remained flat, with renewables growth balancing out gas-related declines.
• Dividend: The interim dividend is maintained at 9.0 cents per share, consistent with 1H2024, reflecting confidence in recurring cash flows.

Exceptional Items and Currency Impact

• Exceptional Gain: S\$140m profit recognized from the sale of SembEnviro (waste management business), partially offset by a S\$2m fair value loss related to a prior India acquisition.
• FX Loss: S\$95m foreign exchange loss, mainly due to Indian rupee depreciation against SGD and heightened volatility after new regional tariffs. This compares to a S\$46m FX gain in 1H2024.

Divestments and Portfolio Actions

• SembEnviro Divestment: Completed in March 2025, contributing S\$142m in exceptional profit and supporting higher free cash flow.
• Senoko Energy: Increased stake from 30% to 50%, strengthening recurring earnings and unlocking S\$25m in expected annual synergies through portfolio optimization and cost efficiencies.

Segmental Performance Breakdown

• Gas and Related Services: Stable earnings despite lower spreads and absence of Vietnam’s Phu My 3. New long-term PPAs in Singapore and higher gas sales helped mitigate declines.
• Renewables: Continued capacity growth, especially in India (operational scale achieved, 3.3GW installed and 3.3GW more under construction). China renewables faced higher curtailment and lower tariffs, pressuring profits. Renewables net profit rose 27% YoY.
• Integrated Urban Solutions: Higher land sales in Vietnam and Indonesia, and improved occupancy rates. Water business optimization ongoing. SembEnviro sale recognized in this segment.
• Decarbonisation Solutions: Ongoing investments, but segment posted a S\$13m loss (widened from S\$10m in 1H2024) as projects remain in early stages. Exploring green hydrogen/ammonia in India and renewables import arrangements.

Liquidity, Leverage, and Cash Flow

• Net Debt: Decreased to S\$7.38bn as of June 30, 2025 (from S\$7.80bn at end-2024), with gross debt at S\$8.26bn.
• Free Cash Flow: Increased to S\$1.31bn (from S\$927m in 1H2024), driven by improved working capital and the SembEnviro divestment.
• Debt Profile: 43% of borrowings are green/sustainability-linked, with a weighted average debt maturity of 4.9 years and average cost of debt at 4.5%.
• Liquidity: S\$8.3bn in unutilised borrowing facilities, supporting future growth and resilience.

Macroeconomic and Policy Events

• Liberation Day Tariffs: Introduced currency volatility and heightened business uncertainty, with direct FX translation impact (S\$23m) on 1H2025 earnings.
• SGD Strengthening: The Singapore dollar strengthened against key regional currencies (INR, CNH, OMR, USD, VND), impacting reported earnings.
• Sectoral Trends: Renewables in China are facing overcapacity, grid bottlenecks, and falling tariffs. The UK Gas and Related Services segment could see reduced demand following the closure of the SABIC ethylene cracker facility.

Capital Expenditure and Investments

• Capex: S\$412m in 1H2025, mainly for renewables (solar projects in India/Singapore) and the hydrogen-ready combined cycle plant in Singapore. Significantly lower than S\$698m in 1H2024.
• Equity Investments: S\$155m, including the additional Senoko stake and Vietnam Urban business capital injections.

Outlook and Forecasted Events

• 2H2025 Guidance: Gas & Related Services earnings expected to remain resilient, but with lower spreads for renewed contracts. Renewables earnings expected to be lower in 2H due to seasonality and ongoing curtailment/tariff pressures in China, partially offset by new project contributions. Integrated Urban Solutions expected to remain stable post-divestment of SembEnviro, but land sales remain sensitive to macro/trade developments.
• Upcoming Developments: Maintenance shutdowns in Singapore and UK plants (minor impact expected), awaiting Vietnam’s renewable tariffs regime revision, and ongoing portfolio optimization.
• Dividend Policy: Management expects to maintain a sustainable dividend payout in FY2025, aligned with underlying earnings.

Conclusion: Steady Execution and Portfolio Resilience

Sembcorp Industries delivered a resilient set of results for 1H2025, maintaining stable adjusted EBITDA and net profit despite revenue declines and significant FX headwinds. The Group’s disciplined capital allocation, expansion in renewables, and strong cash flow generation underscore its defensiveness. Short-term challenges remain, especially in Chinese renewables and from currency volatility, but the diversified portfolio and focus on sustainability position Sembcorp for continued long-term value creation. The dividend outlook remains steady, and the overall tone is positive, reflecting management’s confidence in recurring earnings and strategic direction.

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