These Companies And REITs Are Facing Headwinds According To Their Latest Financial Results

We’re in the earnings season right now.

My colleagues have been busy reading and summarising the latest financial performances of many Singapore companies for readers of the Motley Fool Singapore.

As some of you may be aware, 2016 has so far been a challenging year for Singapore in terms of its economic growth. Many industries – such as oil and gas, construction, shipping, and banking – have shown signs of weakness.

So, which are some of the companies that have been facing challenges recently based on their latest results? Let’s look at a few of them.

1. OUE Hospitality Trust (SGX: SK7), a stapled trust that owns two hotels and a high-end shopping mall, released its 2016 third-quarter results on 31 October 2016.

According to the earnings update written by my colleague Esjay, the trust’s income available for distribution and distribution per unit (DPU) for the reporting quarter had declined by 3.3% and 28.5%, respectively, compared to a year ago.

Moreover, its retail property, Mandarin Gallery, reported a committed occupancy rate of just 89%. That’s a steep decline from the occupancy rate of 98% seen the year before.

So, OUE Hospitality Trust has not had the easiest of times in the third-quarter of 2016.

2. Oil-rig builder Sembcorp Marine Ltd (SGX: S51) is next in line. The company reported its results for the quarter ended 30 September 2016 last week.

Many of you likely already know that the plunge in oil prices over the past few years has caused significant damage to the company’s business. But just how bad is it during the third-quarter of 2016? Let’s look at some numbers taken from my colleague Chin Hui Leong’s earnings update.

With revenue down by 21.4% year-on-year, Sembcorp Marine fell into the red with $21.8 million in losses attributable to shareholders. This compares with a profit of $32.1 million seen in the same quarter a year ago.

At S$8.3 billion for the reporting quarter, Sembcorp Marine’s total order book was also down sequentially from the S$9.2 billion seen in the second-quarter of 2016.

Hui Leong did not cover this, but Sembcorp Marine ended the third-quarter of 2015 with an order book of S$11.6 billion. So as you can see, the company’s order book has suffered both sequential and year-on-year declines.

It brings me to wonder – when will we really reach the end of the tunnel? If only I knew!

3. Another company that reported declining numbers for its latest quarterly report is property developr Roxy-Pacific Holdings Ltd (SGX: E8Z).

According to a summary of the company’s results for the third-quarter of 2016 from my colleague James Yeo, Roxy-Pacific’s net profit and earnings per share had declined by 34% and 39%, respectively, when compared to a year ago.

Roxy-Pacific had experienced significantly higher costs of goods sold and distribution expenses in the quarter.

But, the company commented in its earnings release that some of its new developments are doing well and are expected to bring positive contributions to the table.

4. AIMS AMP Capital Industrial REIT (SGX: O5RU), an industrial REIT with a focus on Singapore, announced its fiscal second-quarter earnings last week. (The REIT’s fiscal second-quarter is the three months ended 30 September 2016.)

Esjay had covered AA REIT’s earnings. The REIT experienced a 4.3% year-on-year fall in gross revenue. This flowed through the income statement as AA REIT saw its net property income and distribution per unit fall by 6.9% and 1.8%, respectively.

What’s more, the REIT’s occupancy rate is down from 96.5% a year ago to 92.7%. Singapore’s weak economy has crept into the trust’s performance. In the earnings release, AA REIT also warned that the industrial leasing market “will remain challenging in the short term.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.