Boustead swings to RM 6.1m profit in 1Q, declares 2.5 sen dividend

KUALA LUMPUR (May 31): Boustead Holdings Bhd returned to the black in the first quarter ended March 31, 2018 (1QFY18) after posting a net profit of RM6.1 million, from a net loss of RM4 million a year ago, on improved performance by its heavy industries division as well as better share of results from associates and joint-venture firms.

Quarterly revenue declined 5.48% to RM2.25 billion, compared with RM2.38 billion reported in 1QFY17, owing to lower palm product prices.

Boustead declared an interim single-tier dividend of 2.5 sen per share, which will be paid on July 4.

Commenting on the latest quarterly results, Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin said, “Admittedly, it has been a tough start to the year and a number of our divisions were impacted.”

“We are confident that our multiple streams of businesses will see us through as the economy picks up, due to renewed positive sentiment,” Lodin said in a statement today.

On a segmental basis, Boustead said its plantation division posted a lower profit, which was dragged by lower average selling prices of crude palm oil and palm kernel. 

The average CPO price dropped 21% to RM2,491 per tonne, from RM3,166 per tonne previously, while the average palm kernel price slumped 32% to RM2,188 per tonne, from RM3,204 per tonne, it added.

As for the finance and investment division, Boustead said segment profit came in higher at RM30.8 million, from RM20.8 million, on the back of better share of results from Affin Bank Bhd and Irat Properties Sdn Bhd.

Boustead said Affin Bank Bhd, its associate company, posted a better result due to a write back of loan impairment, increased net fee and commission income, as well as lower overhead expenses, while Irat Properties, a joint-venture firm, recorded a lower deficit largely due to reduced direct operating costs.

As for the trading and industrial division, Boustead registered a lower pre-tax profit of RM27.7 million, from RM28.5 million a year ago, on improved operating margins and sales volume by Boustead Petroleum Marketing Sdn Bhd, which was offset by lower contributions from UAC Bhd.

Boustead said the heavy industries division closed 1QFY18 with a deficit of RM12.3 million, an improvement from a deficit of RM50.6 million a year ago, primarily due to better share of profit from a joint venture, and a higher contribution as a result of lower operating costs.

As for the pharmaceutical division, Boustead recorded a higher segment profit of RM24.4 million, from RM23.2 million a year ago, which was mainly due to an increased contribution from the private sector business and continuous cost optimisation measures, although this was moderated by a lower contribution from the Indonesia segment. 

Its property division recorded a higher deficit of RM8.1 million, from RM7.4 million, on the back of weaker results from the hotel segment, but supported, despite lower net finance costs and reduced share of loss from a joint venture.

Going forward, Boustead said outlook for 2018 remains positive in both the domestic and international fronts.

“Long-term prospects for Malaysia economy are positive, supported by strong economic fundamentals, a sound financial system, an accommodative monetary policy, as well as the implementation of various government initiatives,” Boustead said.

“As such, the diversified nature of Boustead in six core areas of the Malaysian economy certainly augurs well for the group,” it added. — theedgemarkets.com

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