Sembcorp sees opportunities ahead from AI-driven energy demand; second-half profit drops 5%

SINGAPORE - Sembcorp Industries posted marginal drops in second-half and full-year profit as strong performance from its renewables and urban solutions divisions was offset by lower earnings from its gas and related services segment.

But its group chief executive Wong Kim Yin said Sembcorp sees opportunities ahead with artificial intelligence-driven energy demand, especially in supporting the growth of data centres and technology hyperscalers.

For the six months to December, net profit fell 5 per cent to $448 million from $473 million in the year-ago period. Revenue shrank 11 per cent to $2.9 billion from $3.2 billion a year earlier.

This was mainly attributed to the lower contributions from the gas and related services segment on lower off-take of electricity, lower pool prices and lower gas prices in Singapore, as well as a major outage at its Wilton 10 power station in Britain.

Sembcorp proposed a final dividend of 16 cents per share. Together with an interim dividend of nine cents paid in August 2025, total dividend for 2025 came to 25 cents per share, 9 per cent more than the 23 cents for 2024.

For full-year 2025, net profit dipped 3 per cent to $984 million from $1 billion, as revenue fell 10 per cent to $5.8 billion.

Mr Wong said: “Sembcorp delivered a resilient performance in 2025, reflecting the strength of our diversified portfolio. This year’s dividend affirms our confidence in the company’s future performance and ability to generate sustainable returns.”

He added in an earnings briefing on Feb 25 that the group is looking forward to the completed acquisition of Australia’s Alinta Energy in 2026, which will open up a new market for growth.

Mr Wong also sees opportunities with the growth of AI demand, although he noted that Sembcorp is not directly in the AI game. “But by the time the AI demand translates into energy demand, and it translates into a contract with Sembcorp, that is a solid demand,” he said, adding that Sembcorp Power said in January that it will supply memory chip giant Micron with an additional 150MW of power to support its growing operations.

“That demand for energy is coming from data centres that are hyperscalers with good credit profiles. So we are on the receiving end of it,” Mr Wong said.

“The important thing is that we are ready to capture it, and what we are saying here is that we are very well positioned to capture that demand.”

Sembcorp said 2025’s underlying earnings from its gas and related services segment, its top earner, declined 4 per cent to $701 million, weighed down by the lower contribution from its British operations and weaker generation spreads in Singapore.

But its renewables segment saw net profit before exceptional items rise 5 per cent on the back of its India portfolio.

Meanwhile, its integrated urban solutions division, which develops industrial parks and business and residential spaces, posted 3 per cent growth.

Mr Wong said that Sembcorp’s long-term fundamentals remain robust although it faces headwinds ahead.

In Singapore, he noted that new energy supply is coming on stream, which means lower spark spreads for Sembcorp, referring to lower profitability.

In China, Sembcorp continues to face curtailment and tariff pressures, alongside the recent cancellation of value-added tax refunds for onshore wind projects. But Mr Wong said Sembcorp will remain disciplined in managing its portfolio exposure to China, and that China is a relatively small contributor to its entire business. In Britain, Sembcorp also sees the closure of key customer operations.

Mr Wong said: “We are driving active cost management and repositioning the business to capture data centre opportunities.”

Sembcorp shares fell on Feb 25 after its results announcement. The stock closed 10 cents, or 1.6 per cent, down at $6.20.