RI sand ruling set back SembCorp Industries unit<\/p>\n
Dow Jones, Singapore<\/p>\n
A suspension of a key supply contract from Indonesia will
\nlikely result in SembCorp Industries Ltd.'s engineering and
\nconstruction unit missing earnings growth targets, a top
\nexecutive told Dow Jones Newswires Monday.<\/p>\n
Unit Chief Executive Paul Chain's remarks are in sharp
\ncontrast to the rosy picture SembCorp Industries had painted for
\nthe unit earlier this year, and should disappoint many analysts
\nwho had expected Southeast Asia's largest civil engineering
\ncompany to enjoy a bumper year in 2002.<\/p>\n
The unit, called SembCorp Engineers & Constructors, started
\nthe year with expectations that its net profit should almost
\ndouble on-year to around S$10 million (US$5.5 million) in 2002.<\/p>\n
However, Chain said the company \"may have a bit of problem\"
\nmeeting that target after the Indonesian government recently
\nsuspended sand supply for the company's S$200 million sea
\nreclamation contract awarded by the Singapore government.<\/p>\n
The reclamation project, which commenced last year, has been
\nput on hold during the past two to three months after the
\nIndonesian government stopped the supply to review its sand
\nexport policies.<\/p>\n
\"This year would be the mature year for the project and we are
\nexpecting it to turn in a substantial profit. But if that
\nsubstantial profit is going to turn into a loss, that's going to
\nhave some impact on us,\" Chain said.<\/p>\n
\"The Indonesians stopped the sand supply. We will incur costs
\nin terms of the overheads...We do see there's a downside
\npossibility,\" he said.<\/p>\n
Chain said the halt to the Indonesian sand supply \"may drag on
\nfor a while.\" \"At the same time, we don't know how the
\n(Singapore) government is going to react to it.<\/p>\n
\"At this point, I don't think we will go into the red. But
\nalso, it's not likely that we will make the S$10 million either,\"
\nhe said.<\/p>\n
When asked whether the 2002 earnings will at least surpass the
\nS$5.6 million recorded last year, Chain said \"we don't want to
\nmake that commitment.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ri-sand-ruling-set-back-sembcorp-industries-unit-1447893297",
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