Staying relevant in a challenging market
Interview with Sembcorp Industries' Group President & CEO Tang Kin Fei

Tell us more about Sembcorp and its businesses.
Sembcorp is a leading utilities and marine group with total assets of over S$9 billion. We provide centralised utilities, energy and water to industrial and other customers in Singapore, the United Kingdom, Asia and the Middle East. Our operations have more than 3,300 megawatts of installed power capacity worldwide, and with over four million cubic metres per day of water in operation and under development, we are Singapore's largest water management company. We are a global leader in marine and offshore engineering and a well-known provider of environment and industrial park management services in the region.

Why do you think Sembcorp remains relevant in today's challenging global markets? Sembcorp is in the business of providing products and services which are essential in nature. Case in point are the utilities ranging from power, steam, natural gas to water and wastewater treatment that we provide customers in chemical and petrochemical industry clusters. These products and services are critical to our customers' operations and we believe that there will continue to be a demand for them however challenging the environment.

As a global leader in this niche area, our unique business model (see diagram below) adds to our resilience. In this model, we have vital partnerships with multi-national customers and provide them reliable and cost-effective solutions from centralised facilities which help reduce their capital expenditure and manage their operating costs.

While we continue to build on our established bases in Singapore and in the UK, we are also actively replicating this business model in targeted growth markets such as China, the Middle East and Vietnam.

How has the global economic slowdown and credit crisis affected your business?
The fundamentals for Sembcorp's businesses remain strong. The bulk of our utilities contracts with customers are on a long-term basis.

While we do expect the global economic slowdown to impact some of our customers, on the other hand, these difficult times may also push customers to look for reliable, cost effective solutions such as our bundled utilities offering.

The group is in a net cash position and has strong operating cash flows. This puts us in a good position to take advantage of the opportunities which may well arise from such a downturn for selective M&As as well as acquisition of competencies that will further strengthen our businesses.

There has been some excitement about green companies in recent years. Tell us more about your green businesses?
Sembcorp has several businesses that are environmentally friendly. We are Singapore's first importer and retailer of natural gas, considered the cleanest of all fossil fuels. We also apply combined heat and power or cogeneration technology for more efficient power and steam generation and less emissions. This position at the forefront of cleaner energy extends to our overseas operations. In the UK, we run one of the UK’s largest renewable power plants, fuelled by sustainable wood.

Sembcorp is also a pioneer in water recycling. We recycle complex industrial wastewater to produce high-purity waters for use in process industries, and are one of the few companies capable of treating high-concentration and high-salinity wastewater.

We are in these "green" businesses not just because we believe it is the right thing to do, but also because it is good for our business and provides us an important competitive edge in an increasingly resource-scarce world.

Why should one invest in Sembcorp?
Sembcorp's businesses enjoy recurrent earnings and are underpinned by long-term contracts. We have a consistent performance track record and our management is focused on creating shareholder value. Our Utilities and Marine businesses have strong fundamentals and coupled with our strong operating cash flows and healthy balance sheet, we believe that Sembcorp is in a good position to weather the difficult times ahead and to continue to seize opportunities and grow.

Sembcorp Industries is listed on the main board of the Singapore Exchange and is a component stock of the Straits Times Index and several MSCI and FTSE indices.
Bloomberg Code: SCI SP     Reuters Ticker: SCIL.SI
To download an investor kit, please go to www.sembcorp.com


Contributed by Sembcorp

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