Boustead Holdings net profit fall 26% to RM45.3m

PETALING JAYA: Boustead Holdings Bhd's second quarter earnings dropped 25.9% to RM45.3 million from RM61.2 million a year ago largely due to lower earnings from the plantation division, a higher effective tax rate, and a softer quarter for associate, Affin Holdings.
Revenue in the three month period improved 7.9% to RM2.58 billion from RM2.39 billion, while earnings per share was at 4.38 sen from 5.92 sen last year.
"Admittedly, it has been a challenging quarter for us as a good number of the divisions have been affected by cyclical considerations and external pressures. What is crucial is that we will redouble our efforts to strengthen organic growth as we build our prospects with our new acquisitions during the period under review," deputy chairman and group MD Tan Sri Datuk Seri Lodin Wok Kamaruddin said in a statement yesterday.
Boustead declared a 7.5 sen dividend for the quarter which Lodin said will be paid to all shareholders as at Sept 15, 2014.
For the six month period ended June 30, the group's net profit was down 30.4% to RM112 million from RM161.1 million while revenue rose 3.39% to RM5.08 billion from RM4.92 billion last year.
The group's plantation division was once again the biggest contributor delivering a pre-tax profit of RM61.4 million for the half-year period, a 284% increase compared with RM16 million before.
The division's strong results were attributed to improved average crude palm oil (CPO) prices of RM2,605 per tonne, a 12% increase from RM2,328 per tonne in the previous corresponding period.
Fresh fruit bunches for the six-month period totalled 489,929 tonnes, a 3% increase compared with the previous year.
It said that prospects for the plantation division, particularly in Sarawak should prove positive given that the group received a favourable ruling in a court case pertaining to Native Customary Rights (NCR) land in Sg Kelimut, Kanowit district.
Meanwhile, the second highest contributor to the group was the trading and industrial division which delivered a profit of RM58.4 million, lower compared to the last year's profit which included a non-recurring gain on a property sale.
The finance and investment division reported a pre-tax profit of RM45.5 million, a reduction compared to RM49.4 million in the previous year.
"This was as a result of weaker contributions from the Affin Group, mainly due to margin compression arising from greater competition on the loan and deposit front, as well as a reduction in non-interest income," it said.
The property division recorded a lower profit of RM24.5 million compared to RM76.9 million last year, mainly due to lower revenue as well as the absence of the sale of investment properties and corporate lots.
The heavy industries division recorded a lower profit of RM3.6 million primarily due to a drop in revenue and higher cost.
Boustead said the heavy industries division holds much potential given that the contract with the government to build six second generation patrol vessels with littoral combat ship capabilities for the Royal Malaysian Navy has been sealed.
"Essentially, contributions to the Group's bottom line will improve once progress billings for this project are accelerated," it said.