First Quarter Profit Declines at CSE Global

CSE Global (SGX: 544) is a technology company that focuses on enterprise solutions. It helps to come up with integrated solutions for its clients in the Automation, Telecommunications and Environmental sectors. The company announced its first quarter results on 12 May 2014.

Operating results

The company saw a 4% year-on-year decrease to S$93.2 million in its revenue for the quarter. Operating expenses was relatively stable, increasing by only 2% to S$16.9million. Within its operating expenses, an increase in administrative costs was offset by much lower interest costs. This largely resulted in earnings from continuing operations dropping by 10% to S$7.98million.

CSE Global’s net earnings that are attributable to shareholders, however, were down by 40% from a year ago due to the divestment of its United Kingdom-based business through an IPO last year. CSE Global ended the quarter with earnings per share (EPS) of 1.46 Singapore cents, which is down 12.1% from last year’s EPS from continuing operations.

According to CSE Global’s chief executive, the drop in revenue came mainly from delays in  the commencement of projects in America.

The company is still in a net cash position even after the special dividend that was paid to shareholders early this year. The special dividend was due to the aforementioned divestment of its UK business.

The company’s order book ended the quarter at S$207.4million, some 8.7% lower sequentially and 20.7% lower than what it was at a year ago. CSE Global will continue to look into small greenfield and brownfield projects as growth avenues. Most of the company’s order book – 55.6% of the total to be exact – are for projects related to the Telecommunication sector. Meanwhile, Automation projects takes up 38.5% of the total order book with the rest coming from the Environmental sector. All three sectors had faced a decrease in orders for the quarter. However, due to its strong balance sheet, CSE Global is still confident of its prospects for 2014.

Foolish Summary

CSE Global is a project-based company that focuses on integrated solutions for its clients. Going forward, it might be hard for the company to achieve earnings as strong as before due to the divestment of its UK business; in the past, the healthcare business – the one that was sold – has been one of the strong points about the company. There are already signs pointing in that direction with its first quarter results turning in figures that are nothing to be excited about.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.