Properties and pharmaceuticals boost Boustead earnings

PETALING JAYA (May 29): Boustead Holdings Bhd posted a net profit of RM144.6 million in 1Q ended March 31, up 29% from RM112.2 million a year earlier boosted by income from its pharmaceutical division.

Revenue rose 51% to RM2.4 billion from RM1.59 billion. Earnings per share stood at 13.98 sen from 10.85 sen.

In line with its dividend policy, Boustead has also declared a dividend of 7.5 sen amounting to a total payout of RM77.6 million compared with RM75.2 million paid for the same period last year.

All divisions recorded improved financials during the quarter under review except for the heavy industries unit, which won the contract to build six naval patrol ships from the government in December.

The contract to build six patrol vessels, valued at some RM9 billion, was awarded to Boustead's 79% subsidiary Boustead Naval Shipyard Sdn Bhd (BNS). Boustead's associate Boustead Heavy Industries Corp Bhd owns the remaining 20.77% in BNS.

Boustead said while works on the vessels have yet to move into “full swing”, it incurred losses in the commercial shipbuilding segment that resulted in a RM5 million deficit for its heavy industries division.

Meanwhile, Boustead's pharmaceutical division posted sharply higher revenue to RM446.7 million versus RM28.7 million a year ago, reflecting the consolidation of Pharmaniaga Bhd. The division reported a profit of RM36 million, up 300% from RM9 million a year ago.

The plantation division remained the major contributor to Boustead, delivering a profit of RM92 million, down from RM99 million a year ago. For the period under review the division achieved a lower average crude palm oil (CPO) price of RM3,143 per tonne versus RM3,541 per tonne a year ago.

Crop production was higher with fresh fruit bunch at 282,171 tonne, an 11% increase compared with 253,586 tonnes produced in 1QFY11.

Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin in a statement said the coming quarters will bode well for the group given the positive outlook for CPO prices.

"Additionally, we expect the pharmaceutical division to continue on its positive track record of delivering strong earnings and hope to see progressive billings on the second generation patrol vessels for the heavy industries division.

"As we look to the next few quarters and despite uncertainties in the global economy, the group is confident of sustaining its earnings given the potential of organic growth from the various divisions," he added.

Boustead's property division recorded a profit of RM40 million compared with RM12 million in the previous corresponding quarter mainly due to the sale of a piece of vacant land during the period under review.

For the group's trading and manufacturing division, profit came in higher at RM35 million as sales increased at its unit BH Petrol.

Meanwhile, the finance and investment division posted a profit of RM26 million compared with RM12 million last year, as a result of stronger contribution from the Affin banking group.

This story appeared in The Edge Financial Daily on May 29, 2012.