Friday, September 17

Boustead posts higher profit in 4Q14 despite lower turnover

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KUCHING: Boustead Holdings Bhd (Boustead) recorded higher earnings despite lower turnover in fourth quarter of 2014 (4Q14).

The company in a filing to Bursa Malaysia said its 4Q14 revenue dropped 21 per cent year-on-year (y-o-y) to RM2.83 billion but earnings jumped 36 per cent y-o-y to RM299 million.

In its notes accompanying the release of the company’s 4Q14 and financial 2014 (FY14) financial performance, Boustead said its property division registered a record profit of RM294.6 million in FY14 attributed to fair value gain arising from the appreciation of its investment properties and the strong profit contribution from its joint venture, Boustead Ikano, which also enjoyed substantial fair value gain on its property at Jalan Cochrane, Kuala Lumpur.

For FY14, Boustead said both its turnover and net profit declined. The company noted that its FY14 revenue dipped 5.4 per cent y-o-y to RM10.61 billion while earnings in FY14 decreased 14.7 per cent y-o-y to RM408.2 million.

Additionally, Boustead explained that its trading and industrial and heavy industries divisions contributed lower revenue to the group due to decline in fuel prices and slower progress of work from the Littoral Combat Ship (LCS) project.

Looking ahead, Boustead said, “The group’s plantation division’s profitability for the coming year will be much impacted by the volatility of crude palm oil (CPO) prices and the challenging operating condition in certain areas of Sabah and Sarawak.

“Going forward, the weakness of crude oil prices, competition from Indonesian palm oil as well as from other edible oils, and the recent hike in import duty on vegetable oils and refined oils by India may dampen the prospects for CPO prices.

“Given the current market trends and demand, the pharmaceutical sector in Malaysia continues to hold much potential for growth opportunities.

“The pharmaceutical division envisages stronger contribution from the manufacturing plant in Indonesia upon the completion of the acquisition and streamlining of activities at the plant.

“The division will continue its efforts via the ongoing manufacturing improvement processes, along with collaborations with multinational companies in the European Union region.

“Progress billings from the ongoing and upcoming housing projects will contribute positively to the property division’s bottomline, while the division’s portfolio of well located investment properties will generate good rentals as well as appreciation in value over time.

“Affin Holdings (Bhd), the banking arm of the group will be a major profit contributor towards the finance and investment division.

“The LCS project, defence related maintenance, repair and overhaul activities will contribute to the heavy industries division’s performance going forward,” Boustead said.