Borneo Oil’s fast-food and franchise division, which includes Sugarbun and Pezzo franchised outlets, achieved an improved earnings in 3QFY17 despite the lower turnover generated as compared to 2QFY17.
KUCHING: Borneo Oil Bhd’s (Borneo Oil) earnings for the third quarter of financial year 2017 (3QFY17) ended October 2016 rose more than three times to RM21.63 million from RM5.26 million recorded in 3QFY16 ended October 2015.
The company in a filing to Bursa Malaysia, said 3QFY17 revenue soared by 38 times to RM950.45 million from RM23.96 million generated in 3QFY16.
Meanwhile, Borneo Oil in its accounts notes said the group’s overall performance for the quarter ended October 31, 2016 was satisfactory with a total revenue of RM950.44 million as compared to the preceding quarter ended July 2016 of RM1.047 billion.
Borneo Oil explained that the drop of 9.26 per cent in revenue in 3QFY17 as compared to the second quarter of financial year 2017 (2QFY17) ended July 2016 was attributed to a quieter gold trading and investment climate.
However, Borneo Oil pointed out that the group registered an improved net profit of RM21.631 million as compared to RM4.35 million in the preceding quarter ended July 2016.
Elaborating further, Borneo Oil said the group’s fast food and franchise division continued with its steady performance in 3QFY17 with a revenue of RM12.08 million as compared to that of RM13.666 million in 2QFY17.
The group noted the performance was consistent with the overall slowdown in the general economy, which resulted in lower consumers’ demand.
Despite that, Borneo Oil revealed that three Sugarbun and four Pezzo franchised outlets were added during the quarter ended October 2016, which brought their total number of outlets to 89 and 48 respectively.
Borneo Oil noted its fast-food and franchise division achieved an improved earnings in 3QFY17 despite the lower turnover generated as compared to 2QFY17.
Meanwhile, on its mining, energy and related operations, the company the division registered lower revenue of RM937.33 million against the preceding quarter of RM1.033 billion.
It observed that its trading or investment division purchased 5,426.8 kg of gold and sold 5,508 kg of gold during 3QFY17, which left a closing inventory of 836.34 kg.
Borneo Oil noted that its mining activities produced 13.015 kg of gold during the same period.
It added the division recorded a lower net profit of RM2.59 million as compared to RM3.39 million recorded in 2QFY17.
Commenting on the group’s prospects, Borneo Oil said, “Gold prices shot up to US$1,335 per ounce briefly on November 10, 2016 after US President Elect Donald Trump won the US presidential election and since then have retreated to US$1,130 per ounce, a drop of over US$200 per ounce over a period of 45 days.
“Against this, the overall confidence in the US economy under a Trump presidency and leadership have moved the Dow to almost 20,000 points.
“The company is of the view that once the American economy picks up, coupled with the interest rate hikes, inflation will play a major part in the recovery of gold prices, which will eventually catch up with the value of other investment assets.
“As such, the company still holds a very optimistic long term view on gold,” Borneo Oil said.
Aside from that, Borneo Oil said the group’s other divisions namely the head office and the property, management and operation divisions contributed immensely in 3QFY17 through a revaluation exercise carried out in October 2016 of its investment properties, which registered an overall increase in the fair value of RM35 million.
It explained that the group’s increase in its overall profit of RM21.631 million against that of RM4.35 million in the preceding quarter was due to the revaluation of its investment properties.