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These 3 Companies Have Recently Reported Weaker Results

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. Singapore Post Limited (SGX: S08) reported its second-quarter earnings for its fiscal year ending 31 March 2017 last Friday. The company is primarily in the business of providing mail and logistics services. Its business is currently organized into three major segments: Postal, Logistics, and eCommerce.

 In the reporting quarter, Singapore Post’s revenue grew by 22.3%. But, its profit attributable to shareholders actually slid by 41.2%. Moreover, Singapore Post had generated negative free cash flow and saw its balance sheet change from a net cash position a year ago to a net debt position.

One other thing is that Singapore Post had recently changed its dividend policy from one based on paying an absolute amount, to one based on paying out between 60% and 80% of its underlying net profit.

2. Singapore Airlines Ltd (SGX: C6L) also reported results last week. The airline operator’s earnings was for the second quarter of its financial year ending 31 March 2017.

In sum, Singapore Airlines recorded lower sales and a sharp fall in profit. The airline operator also registered negative free cash flow. Revenue was down due to lower passenger load and lower revenue pax per kilometer. The former slipped by 3.3% while the latter was down 4.6%.

As for the financials, revenue for the reporting quarter was $3.65 billion, down 5.1% compared to the same quarter last year. But the bottom-line had a more drastic fall – profit attributable to shareholders declined by 70% to $64.9 million.

3. Another company that reported weaker results last week is StarHub Ltd (SGX: CC3), Singapore’s second largest telecommunications company.

In its latest quarterly report, StarHub’s revenue was down across the board across all its business segments, with the exception of Broadband. Total revenue was down 3% year-on-year and the bottom-line suffered a big haircut of 28%. The telecommunications outfit also did not manage to generate much free cash flow (there was just S$2.4 million in free cash flow for the reporting quarter).

It is also worth noting that StarHub had generated S$229.4 million in free cash flow for the first nine months of 2016 and yet paid out S$259.7 million in dividends over the same period. Paying out more cash than what has been earned is not a sustainable long-term strategy, so that’s something investors may want to watch.

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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.