VICOM Limited’s Latest Earnings: Revenue and Profit Dives

Vicom Limited (SGX: V01) released its fiscal first-quarter earnings yesterday evening. The reporting period was for 1 January 2016 to 31 March 2016.

Vicom is a leading provider of vehicle and non-vehicle related technical testing and inspection services with operations primarily in Singapore. The company is majority-owned by land-transport giant ComfortDelGro Corporation Ltd  (SGX: C52).

You can catch up with Vicom’s fiscal fourth-quarter earnings here.

Financial highlights

The following’s a quick take on Vicom’s latest financial figures:

  1. Revenue for the first-quarter came in at $25.4 million, down 10.4% from the same quarter a year ago.
  2. Net profit for the first-quarter fell by over 13% year-on-year to $7.3 million.
  3. Consequently, earnings per share (EPS) was 8.25 cents in the reporting quarter, down over 13% from the 9.50 cents recorded last year.
  4. Cash flow from operations came in at a little under $8 million for the first-quarter of 2016 while capital expenditures was $656,000. The low capex gave Vicom $7.3 million in free cash flow, down 3% from the free cash flow of $7.6 million seen a year ago ($8.1 million in cash flow from operations and $581,00 in capital expenditures).
  5. As of 31 March 2016, Vicom had $107.4 million in cash and equivalents and no debt. This is a minor increase from the net cash balance of $100 million recorded at the end of 2015.

In all, Vicom experienced its first double-digit revenue and profit decline in a while. Management cited lower business volumes as the reason behind the fall. On brighter notes, Vicom’s balance sheet remains strong and the firm generated healthy free cash flow.

Operational highlights

There does not appear to be too much to look forward to at the moment. Vicom’s management gave a cautious outlook in the earnings release, saying that the company’s non-vehicle testing services are not expected to improve anytime soon:

“Demand for vehicle testing services will continue to be impacted as more vehicles will be deregistered during the year. Demand for non-vehicle testing services is not expected to improve with the continuing slow-down in the industries that we serve.”

I had previously mentioned that the higher rate of vehicle deregistration may affect Vicom’s vehicle testing business. A few tough quarters are likely for Vicom as a result.

At its closing price yesterday of $5.92, Vicom traded at 17.3 times its latest trailing earnings. The company also carried a trailing dividend yield of 4.8%.

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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 Chin Hui Leong owns shares in Vicom.