Here's what to blame for Sembcorp's 13% profits drop

But there were positive surprises.

According to DBS, 2Q13 PATMI of S$165m (-13% y-o-y, 7% q-o-q) came in below its forecast (S$170m) and consensus (S$199m) due to weaker Marine and Urban Development. 

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Utilities, however, surprised on the upside with earnings climbing 18% y-o-y to S$111.9m, above our forecast of S$76m and hitting more than 60% of our original FY13F.

Marine earnings declined 13% y-o-y on weak margins. In 2Q, Utilities accounted for 68% of group PATMI and Marine contributed 46% before allocation of corporate expenses. Group sales dropped 6% y-o-y to S$2.5bn.

Singapore & China are drivers. Despite lower electricity sales and HSFO prices, Singapore profits grew 8% y-o-y to S$69m, partly dragged by one-off charges of S$8m. Net margin expanded to 6.2% from 5% in 2Q12.

China grew the fastest, up 60% y-o-y as AES’ power assets were more profitable in the quarter, thanks to lower coal prices for its coal-fired plants.