Friday 29 Mar 2024
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KUALA LUMPUR (May 25): Boustead Holdings Bhd's net profit for the first quarter ended March 31, 2015 (1QFY15) has plunged 99.8% to RM100,000 or 0.01 sen per share from RM56.4 million or 5.45 sen per share a year ago, on lower revenue.

Revenue was down 24.3% to RM1.89 billion from RM2.499 billion in 1QFY14, its filing to Bursa Malaysia today showed.

Weaker financials notwithstanding, Boustead declared its first interim dividend of 5 sen per share in 1QFY15, which will be paid on June 30, 2015.

In a media statement, Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin said: "This has indeed been a challenging period. External pressures and a general 'wait-and-see' mood in the consumer market is definitely bearing down on the group's earnings."

Lodin is also the chairman of the board of directors of controversial debt-laden government-owned strategic investment fund, 1Malaysia Development Bhd (1MDB).

Segmentally, Boustead's plantation revenue registered an 80% slump in pre-tax profit and a 32.4% drop in revenue, which the group blamed on declining fresh fruit bunch (FFB) production (down 16%) and bearish palm product prices.
 
"This was largely due to weaker crude palm oil prices, which averaged at RM2,236 per tonne, a 15% drop from RM2,629 per tonne in the previous year's corresponding period," the group said.
 
Its heavy industry division returned to the black in 1QFY15, after posting a pre-tax profit of RM3.6 million from a pre-tax loss of RM4.1 million, on better profit contribution from its joint-venture companies, Contraves Advanced Devices Group and BHIC AeroServices Sdn Bhd.
 
Boustead's pharmaceutical division registered a 2.5% increase in pre-tax profit to RM32.5 million in 1QFY15, as compared with RM31.7 million in 1QFY14, mainly due to higher margins as a result of improved operational efficiencies and lower manufacturing costs.
 
Its property division saw both revenue and pre-tax profit jump 19.5% and 16.7%, respectively, as a result of higher progress billings.
 
Despite chalking a 20.8% growth in revenue, Boustead's finance and investment division's pre-tax profit plunged 89.2%, mainly due to weaker contributions from Affin Holdings Bhd, which was impacted by higher allowance for loan impairment as a result of a one-off provisioning attributable to the commercial banking arm.
 
Meanwhile, the group's trading and industrial division registered a lower revenue and pre-tax profit that fell 39% and 56% respectively, which Boustead blamed the "declining volume and fuel prices as putting pressure on revenue."
 
Going forward, Boustead (fundamental: 0.65; valuation: 2) expected this year to be a challenging year, in light of the global economic uncertainties and challenging market conditions, but noted that the diversified nature of its businesses in six segments would be beneficial for the group in such times.
 
"We are confident we will be able to weather the challenges that lie ahead, while ensuring that shareholders benefit from our commitment in terms of dividend yield," Lodin said.
 
Boustead closed unchanged at RM4.40 today, for a market capitalisation of RM4.55 billion.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.) 

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