KUALA LUMPUR (Aug 28): Diversified group Boustead Holdings Bhd returned to the black in the second quarter ended June 30, 2019 (2QFY19) after two consecutive quarters of posting losses, thanks to a RM119.5 million gain on disposal of plantation land in Seberang Perai Utara, Penang.

It posted a net profit of RM24.3 million for 2QFY19 compared with a net loss of RM27.6 million a year ago. As a result, it recorded an earnings per share of 1.2 sen for 2QFY19 compared with a loss per share of 1.36 sen for 2QFY18.

Revenue for the quarter under review rose 4.7% to RM2.54 billion from RM2.43 billion a year ago.

The improved quarterly results helped the group to turn a net profit of RM1.9 million for the cumulative six months (1HFY19) from a net loss of RM21.5 million a year ago, while revenue grew 6.8% to RM5.05 billion in 1HFY19 from RM4.73 billion in 1HFY18.

In a bourse filing today, Boustead said stripping out the disposal gain, the group recorded a lower pre-tax profit, mainly as a result of higher finance cost and operating losses by the heavy industries and plantation divisions.

For 1HFY19, the heavy industries division posted a higher deficit of RM63 million from RM29.5 million a year ago, on the back of weaker results from its operating units.

While the plantation division registered a surplus of RM70.1 million in 1HFY19 as its bottom line benefitted from the gain on disposal of plantation land, the division continued to be impacted by the significant drop in palm product prices.

"Although the gain on disposal of land contributed to the division's profit, the expected weak prices of palm products, the challenges of the Sarawak operations and the newly acquired estates will influence performance for the rest of the year," said Boustead.

The group warned that outlook for the second half of 2019 is expected to be challenging, as uncertainty is also likely to remain elevated given the persistence of global trade disputes.

"The plantation division’s profitability hinges mainly on fresh fruit bunch crop production and selling prices. Palm oil prices are expected to hover around the current range before recovering towards year-end amidst uncertainties relating to the US-China trade war," it said.

Over the long-term, the pharmaceutical division is poised to tap into opportunities for growth as it expands its product portfolio to cater to evolving healthcare needs via research and development. "The division continues to step up its global presence, particularly in Indonesia which remains a key growth area. The division also remains focused on continuous enhancements in its operations to ensure greater efficiency and cost optimisation," added Boustead.

Boustead shares closed one sen or 1% higher at RM1.01 today, with a market capitalisation of RM2.05 billion.