Boustead posts 56% jump in pre-tax profit for 1Q2010

KUALA LUMPUR: Main board-listed Boustead Holdings Bhd posted a 56% jump in pre tax profit to RM134.6 million in its 1Q ended March 31, 2010, from RM86.1 million for the same quarter last year.

Its net profit totalling RM90.2 million for 1Q2010 was 48% higher than the RM60.8 million for 1Q2009.

Group revenue for the current quarter of RM1.6 billion was 28% higher than that recorded during the corresponding period last year.

“Notable increase in revenue from both the Plantation and Trading Divisions was attributable to the stronger palm product prices and higher sales volume, respectively,” said Boustead in a filing to Bursa Malaysia on May 31.

Its Property Division's pre-tax profit of RM6.3 million for the quarter under review was lower than in 1Q2009 mainly due to lower contribution from property development activities and hotel operations, while the retail mall operations had performed better on improved occupancy and rental rates.

Among the property developments undertaken by the group were Mutiara Rini in Johor, Mutiara Damansara in Petaling Jaya as well as 183 Ampang in Jalan Ampang.

“Despite visible signs of recovery in both the domestic and global economies, the remaining months of FY2010 will continue to be challenging due to the renewed concerns over contagion effects from the Greek fiscal crisis and China's measures to curb domestic property prices that may squeeze raw material demands,” said Boustead.

The Property Division can look forward to stable recurring income from its portfolio of commercial and retail properties and the expansion of the hotel operations.

The divestment of BH Insurance Bhd, which brought RM362.6 million cash inflow in April 2010 will further strengthen the group's cash position.

Plantation's earnings will be dependent on palm oil prices, which are likely to be sustained at satisfactory levels until year-end due to the slower growth of Malaysian CPO production and lower palm oil stocks, although slower demand from the biodiesel sector and the stronger ringgit may cap palm oil's gains.