KUALA LUMPUR (Aug 6): Hock Seng Lee Bhd's (HSL) net profit for the second quarter ended June 30, 2020 (2QFY20) slumped 76% to RM3.95 million from RM16.43 million a year earlier.

In a bourse filing today, HSL said revenue for the quarter fell to RM83.05 million from RM175.41 million previously.

Earnings per share narrowed to 0.72 sen from 2.99 sen.

HSL attributed the slump in its net profit and revenue to Covid-19, with 2QFY20 beginning at the height of the Movement Control Order (MCO).

The recovery phase of MCO only began on June 10, it said.

“As a result, HSL, like the rest of the industry, had just about two weeks of full working days,” it said.

For the six months ended June 30, HSL’s net profit narrowed to RM11.51 million from RM30.52 million in the year-ago period, on the back of revenue of RM195.45 million versus RM322.13 million a year earlier.

HSL said it has decided not to declare any interim dividend as a prudent measure in view of the pandemic to preserve cash reserves to sustain ongoing operations.

On its prospects, HSL said with the substantial value of projects in hand, the challenge now is to manage project execution efficiently under the present circumstances and constraints where there is acute labour shortages, travel movement restriction and disruption to material supplies.

It said there will be an inevitable increase in operating costs and the fixed overheads incurred during MCO and Conditional MCO will impact margins.

HSL said it resumed work in June 2020 to ensure strict compliance with safe operating procedures, and it is making every effort to ascertain the current states of its projects after a lapse of nearly three months.

The firm said it was slowly picking up work momentum but is still unable to achieve the level of operations before the MCO.

In a separate statement, HSL said no major contracts were secured in this quarter.

“Nevertheless, the company is actively participating in tenders and procurement initiatives that relate to its core businesses,” said HSL.

HSL managing director Datuk Paul Yu Chee Hoe said despite a quarter of limited construction activities, HSL was able to record revenue and profits.

“This prolonged public health emergency has thrown up many challenges but the company is moving on. The moment RMCO started, we resumed work,” he said.

“Barring no further lockdown, 2Q may have seen the worst in terms of productivity, and the company's challenge now is on how to manage projects efficiently,” Yu said.

Yu said labour shortage is a continuous problem, adding that it has become even more acute.

“Worksites have all reopened and companies are fighting to hire from the same pool of workers resulting in higher salaries.

“Our priority now is to maintain the fundamental and substratum of our business operations,” he said.

At the midday break today, HSL dipped 0.93% or 1 sen to RM1.07, valuing it at RM623.46 million.