Sembcorp Industries’ Singapore profits to crash on back of intense competition

Singapore Energy’s profit sharnak 34% in Q4.

Sembcorp Industries’ Singapore operations will continue to struggle on back of intense competition and persistently lower oil prices.

Singapore Energy reported a 34% quarter-on-quarter drop in profits to $26.8m due to weaker spark spread and lower high sulphur fuel oil (HSFO) prices.

According to CIMB, Singapore energy is in for a 13% profit contraction in FY15. Singapore Energy’s contribution could drop to 48%, a far cry from its historical level of above 50%.

“We forecast a 13% dip in Singapore’s profit in FY15 on 1) weak spark spread as competition remains stiff with some contracts being renewed at lower rates, 2) lower HSFO as the oil price drags and 3) lower vesting contracts (from 40% to 30%),” stated CIMB.