Boustead sees Q4 earnings fall on lower other operating income and losses of joint ventures

PETALING JAYA: Boustead Holdings Bhd saw a 28.66% fall in its net profit for the fourth quarter ended December 31,2017 to RM86.10 million from RM120.70 million a year ago due to weaker other operating income and share of loss in joint venture companies despite reporting a higher operating profit.
Revenue for the period rose to RM2.78 billion, a 15.05% increase from the RM2.42 billion recorded in the previous year’s corresponding quarter-- supported by higher contributions from all its segments namely pharmaceutical, plantation, heavy industries and trading as well as industrial with exception to its property division and finance and investment divisions.
The group has declared a dividend of 2.5 sen for the quarter under review. This brings payout to 11 sen a share for the full year.
The board of directors of the diversified group expects a positive outlook for the year ahead on the back of favourable economic conditions.
“In the last quarter of 2017, palm oil prices declined because supply outstripped demand leading to high stockpiles. The market sentiment also became bearish when the Indian government raised import taxes for edible oils to curb imports. To spur demand and boost prices, the Malaysian government has suspended export taxes for crude palm oil (CPO) for three months. In the coming year, CPO prices are anticipated to soften after first quarter 2018 on expectations of robust output, increased soybean acreages in the US and competition from Indonesia for the Indian market share,” the board said.
The likelihood of Indonesia increasing its biodiesel mandate will lend support to palm oil prices. In 2018, the operating conditions in Sugut, Sabah and Sarawak regions will continue to influence the Division’s crop production. Nonetheless, the proposed acquisition of approximately 11,579 hectares of oil palm plantations in the district of Labuk and Sugut in Sabah, upon completion in the second quarter of 2018, should contribute positively to the Division’s crop production,” it added.
The group is expecting further strengthening of earnings, driven by research and development efforts the pharmaceutical division and improving operational efficiency.
For the heavy industries and trading division, the Littoral combat ship and Littoral Mission Ships projects, coupled with other defence related maintenance, repair and overhaul activities, is expected to drive performance, while the finance and investment division is expected to see its earnings being driven by the group’s associate, Affin Bank.
Meanwhile, the property division is expected to see positive contribution on the back of progress in billings, rentals from investment properties, and hotel activities.
Its full-year net profit rose 25.20% to RM462 million from RM369 million due to higher gain on disposal of plantation land and lower finance cost as well as better operating results from plantation and heavy industries divisions.
Revenue grew 19.6% to RM10.02 billion for the financial year ended December 31, 2017 from RM8.37 billion for the financial year ended December 31, 2016.
Its share price was down one sen to RM2.78 earlier, with some 98,300 shares changing hands.