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Here Are 3 Companies That Recently Reported Weaker Financials In Their Quarterly Earnings

Photo credit: Rafael Matsunaga. Licence: http://creativecommons.org/licenses/by/2.0/

We’re back in the earnings season again!

As is common with every earnings season, there will be some companies posting growth, some companies posting flat numbers, and some companies experiencing declines. So, which are the companies that have recently reported weaker financials in their latest results? Let’s look at three of them:

1. Singapore’s second largest bank by total assets, Oversea-Chinese Banking Corp Limited (SGX: O39), reported its 2016 fourth quarter earnings last week. Total income (the “revenue” of the bank) fell by 5% to S$2.2 billion compared to a year ago. Together with higher expenses, OCBC’s lower revenue resulted in an 18% drop in net profit to S$789 million.

During the quarter, the bank saw its net interest margin drop. Its allowances for loans and impairment also spiked by 57%. These – and more – all played a profile in marking down OCBC’s profit for the quarter.

But, the bank still has a strong balance sheet, given that its capital adequacy ratios (CARs) are well ahead of regulatory requirements. In the fourth quarter of 2016, OCBC reported a Common Equity Tier 1 (CET1) CAR of 14.7%, a Tier 1 CAR of 15.1%, and a Total CAR of 17.1%. Meanwhile, the Monetary Authority of Singapore require banks here to have CET1, Tier 1, and Total CARs of at least 6.5%, 8%, and 10%.

2. Challenger Technologies Limited (SGX: 573) is another company that released its latest results last week. In the quarter ended 31 December 2016, the company’s revenue fell by 13% year-on-year while net income declined by a way sharper 44%. Consequently, its earnings per share plunged by 46%.

Challenger Technologies is an IT products retailer and currently has 43 stores in Singapore. The company also runs an online IT products market place called hachi.tech.

In its reporting quarter, the company experienced softer consumer demand which led to lower sales. But, Challenger Technologies said that online sales from hatchi.tech, which was launched in April 2016, helped offset some of the loss.

Commenting on its future, the company said in its earnings release that its new flagship store in Bugis Junction will open in May this year. As a reminder, Challenger Technologies had to close down its previous flagship store at Funan DigitaLife Mall (now known simply as Funan) as the mall was slated to undergo a multi-year redevelopment in the middle of 2016.

The IT products retailer thinks that its new flagship store will meet the requirements of its loyal customers by “providing an even more immersive omni-channel shopping experience.”

3. The next company on our list is Singapore Airlines Ltd (SGX: C6L), which reported its earnings for the quarter ended 31 December 2016 two weeks ago.

Singapore Airlines’ revenue for the reporting quarter was down 2.3% compared to the same quarter a year ago. This led to a 35.5% decline in profit attributable to shareholders.

Management said that revenue was down due to lower passenger flown revenue in a weak-yield environment. As for 2017, the company expects another challenging year amid tepid global economic conditions and geopolitical concerns, alongside other market headwinds such as overcapacity and aggressive pricing by competitors.

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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.