Boustead 1Q earnings down 29% on lower CPO price

KUALA LUMPUR: Boustead Holdings Bhd’s net profit fell 29% to RM134 million for the first quarter (1Q) ended March 31, due to lower crude palm oil (CPO) prices from its plantation division.

Revenue, however, rose 4.1% year-on-year to RM2.5 billion during the quarter, the company said in a filing with Bursa Malaysia yesterday.

The plantation division was severely impacted by depressed commodity prices and a decline in crop production during the quarter under review, registering a profit of RM31 million compared with RM92 million a year ago. Crop production of 258,394 tonnes for the quarter was 6% lower than the previous year.

The group registered an average palm oil price of RM2,335 per tonne, representing a decline of 26% from RM3,164 a year ago.

“Global volatility made an impact on CPO prices followed by marginal declines from our divisions which resulted in an overall decline in the group’s profitability,” said deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin in a statement.

Although Boustead’s property division was a major contributor to the group’s earnings in 1Q, its profit of RM33 million was 17% lower than a year ago. The previous year’s results benefited from the inclusion of a RM25.5 million gain from the disposal of an investment property.

Boustead’s other divisions also recorded a year-on-year decline in profit — trading and industrial by 14%, pharmaceutical (17%), and finance and investment (4%).

The group said although BHPetrol had registered a higher turnover as a result of increased sales volume, it was not sufficient to cushion the lower stock holding gains for its trading and industrial division.

It added that its pharmaceutical division’s results were impacted by provision for doubtful debts while gross profit margin was lower as a result of higher direct overheads. The slight decline in profit for its finance and investment division resulted from contributions from the Affin Group and Cadbury.

Lodin said the group will increase efforts and seek new opportunities while focusing on improving organic growth.

“We are confident our strong fundamentals in terms of our diversified streams of income and viable businesses will allow us to accomplish this and deliver a profitable year,” he said.

Boustead declared a first interim dividend of 7.5 sen per share, amounting to a total payout of RM77.6 million for the quarter under review. The dividend will be paid on June 28 to shareholders registered at the close of business on June 17.

For the quarter under review, earnings per share was 9.66 sen against 13.96 sen a year ago, while assets per share stood at RM4.53 compared with RM4.50.

This article first appeared in The Edge Financial Daily, on May 23, 2013.


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