Vicom Limited’s Latest Earnings: Revenue and Profits Fall Again

Vicom Limited (SGX: V01) released its second-quarter earnings yesterday evening. The reporting period was for 1 April 2016 to 30 June 2016.

Vicom is a leading provider of 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 first-quarter earnings here.

Financial highlights

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

  1. Revenue for the second-quarter came in at $25.4 million, down 6.9% from the same quarter a year ago.
  2. Net profit attributable to shareholders for the second-quarter fell by 12.6% year-on-year to $6.6 million.
  3. Earnings per share (EPS) was 7.47 cents in the reporting quarter, down 12.6% from the EPS of 8.55 cents recorded last year.
  4. Cash flow from operations came in at $6.5 million for 2016’s second-quarter and capital expenditure was around $1.1 million. The low capex gave Vicom $5.5 million in free cash flow, down 31% from the free cash flow of $8 million seen a year ago ($8.7 million in cash flow from operations and $727,00 in capital expenditures).
  5. As of 30 June 2016, Vicom had $95.8 million in cash and equivalents and no debt. This is a decrease from the net cash balance of $100 million recorded at the end of last year.

In all, Vicom experienced its second double-digit profit decline in a row. Revenue was down, albeit at a slower pace compared to the previous quarter. Like in the first–quarter of 2016, management cited lower business volumes as the reason behind the lower revenue. Meanwhile, Vicom’s free cash flow also fell significantly.

The good thing is Vicom’s balance sheet remains strong.

The board of directors had proposed an interim dividend of 8 cents per share for the second-quarter of 2016, down from the interim dividend of 8.75 cents per share paid out last year for the same period.

Operational highlights and the road ahead

There isn’t too much to look forward to at the moment with Vicom. The company left its outlook unchanged from the previous quarter. It said:

“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 have previously mentioned that the higher rate of vehicle deregistrations in Singapore may affect Vicom’s vehicle testing business. This business is not expected to pick up soon, based on the company’s outlook.

At its closing share price of $5.91 yesterday, Vicom traded at 18 times its trailing earnings and carried a trailing dividend yield of 4.7%.

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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 Limited.