Analysis of Sembcorp Industries FY2025 Results: Resilience Amidst Energy Transition Challenges

Sembcorp Industries released its FY2025 results, highlighting resilient financial performance despite headwinds in key markets. The group continues to deliver stable earnings anchored by long-term contracts, disciplined cost management, and strategic expansion, particularly in renewables and urban solutions.

Key Financial Metrics & Year-on-Year/Quarter-on-Quarter Comparison

Historical Performance Trends & Exceptional Items

The group’s turnover and EBITDA declined year-over-year and quarter-over-quarter, primarily due to reduced contributions from Gas and Related Services following lower wholesale electricity and gas prices in Singapore and the UK, as well as weaker UK demand. However, new capacity additions and acquisitions in Renewables partially offset these declines. Net profit was also affected by FX losses (mainly INR depreciation against SGD), with S\$154m FX loss registered in FY2025.

Exceptional items totaling S\$135m were recognized, including S\$143m from gains on disposal of subsidiaries and assets held for sale, S\$39m from bargain purchases, offset by S\$28m impairment and S\$19m net loss on liquidation of investments.

Divestments & Asset Sales

Sembcorp completed the sale of SembEnviro and divested a municipal water business in China, boosting cash flow from investing activities and supporting a higher free cash flow of S\$2,070m (up from S\$1,790m in FY2024).

Chairman’s Statement

“The Group delivered resilient financial results in 2025, reflecting the strength of our diversified portfolio, disciplined cost management and execution of our strategic priorities. Supported by long-term contracts across our portfolio, the proposed dividend in 2025 reflects the Group’s underlying earnings and cash flow visibility.
In 2026, the Gas and Related Services segment is expected to be affected by reduced margins for newly contracted volumes in Singapore, with 5% of Sembcorp’s portfolio and approximately half of Senoko Energy’s portfolio to be re-contracted. The effect would be partially offset by operational and financial synergies from the two portfolios. Commissioning of the 600MW hydrogen-ready power plant, which is expected in 4Q2026, will further enhance the fuel and cost efficiency of our fleet. This highly competitive portfolio positions us well to capture growing power demand in Singapore, particularly from data centres and high-tech manufacturing sectors.
In Renewables, our expanding platforms in India, the Middle East and Singapore will continue to grow, with new capacity progressively coming online between 2026 – 2030. Contribution from China is expected to be affected by the cancellation of the value-added tax refund for onshore wind power sales, curtailment and downward pressure on tariff.
The Urban business is making steady progress in developing 0.8 million sqm of ready-built factories. These assets are expected to deliver meaningful recurring income post completion in 2027.
Our diversified portfolio puts us in good stead to navigate the near-term headwinds and macro uncertainties. The acquisition of Alinta Energy, which is expected to complete by the end of 1H2026, will further strengthen our earnings base, broaden recurring cash flow, and support our plan to sustain dividends over time.
We remain focused on driving sustainable, value-accretive growth while maintaining disciplined capital allocation and advancing a sustainable energy transition.”

Dividends

The proposed final dividend is 16.0 cents per share, bringing the total dividend for FY2025 to 25.0 cents per share, up from 23.0 cents in FY2024 (+9% YoY).

Events & Outlook

• Alinta Energy acquisition: Expected to complete by end of 1H2026, with one-off costs of approximately AUD208 million to be recognized as exceptional costs.
• UK: Four-week maintenance at Sembcorp Biomass Power Station (Wilton 10) scheduled mid-2026.
• China: Cancellation of VAT refund for onshore wind power sales, increased curtailment, and tariff pressure expected to impact renewables earnings.
• Hydrogen-ready plant: 600MW facility in Singapore to be commissioned in 4Q2026, enhancing competitive position.
• Currency volatility: Stronger SGD and FX translation losses (S\$32m impact), particularly from India, China, and Vietnam.

Corporate Actions

• Asset sales: Sale of SembEnviro and divestment of a municipal water business in China.
• Capital expenditure: S\$869m in FY2025, mostly for renewables and hydrogen-ready plant development.
• Equity investment: S\$323m, largely for increasing Senoko Energy stake and Vietnam urban business capital injection.
• Debt profile: Gross debt increased to S\$8,956m (from S\$8,671m), with healthy liquidity (S\$8.2bn unutilised borrowing facilities).

Conclusion & Recommendation

Overall, Sembcorp Industries demonstrates resilient financial performance in FY2025 despite lower spreads in core energy segments and FX headwinds. The group’s diversified portfolio, growing renewables capacity, and stable urban solutions segment position it well for long-term growth. Dividend increases and strong free cash flow are positive signals. However, near-term challenges—including lower contract margins, currency volatility, and policy changes—should not be overlooked.

If you are currently holding Sembcorp Industries stock: Consider holding your position, as the group’s diversified earnings base, expanding renewables pipeline, and completion of the Alinta acquisition are likely to strengthen future cash flows and dividends. Monitor the impact of FX volatility and contract renewals in Singapore and the UK.

If you are not currently holding Sembcorp Industries stock: Consider accumulating on weakness, focusing on the group’s long-term fundamentals, dividend growth, and exposure to the energy transition and digital economy. Be mindful of near-term earnings volatility and exceptional costs related to acquisitions.

Disclaimer: This recommendation is strictly based on information disclosed in the FY2025 financial report and does not constitute personalized investment advice. Please consult your financial advisor and conduct further due diligence before making any investment decisions.

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