We’re in the tail end of the earnings season.
As it is with every earnings season, there will be some companies posting growth, some delivering a mixed performance, and some experiencing declines in their business. So, which are the companies that have turned in a mixed performance with their latest earnings releases? Let’s look at two of them:
1. Sembcorp Industries Limited (SGX: U96) reported its earnings for the quarter ended 31 December 2016 just last week.
The company is a conglomerate with three major business segments that are in very different fields. The segments are Utilities, Marine, and Urban Development & Others. The Marine segment’s contribution comes mainly from Sembcorp Industries’ 61% ownership stake in oil rig builder Sembcorp Marine Ltd (SGX: S51).
In the reporting quarter, Sembcorp Industries saw its revenue fall by 16.3% year-on-year to S$2.03 billion whereas its profit attributable to shareholders came in at S$153 million, a big jump from the loss of S$146 million seen in the same quarter a year ago.
The conglomerate’s lower revenue was driven by weakness in its Marine segment (no surprises there, given the challenging conditions seen in the oil & gas industry) which was partially offset by top-line growth from the Utilities segment. The profit increase came about from the absence of writedowns and provisions at the Marine segment that were recorded in the fourth quarter of 2015.
Looking ahead, Sembcorp Industries expects its Singapore utilities business to continue to face intense competition. As for the Marine side, the company thinks a robust recovery in the oil & gas industry will take awhile to arrive.
2. The other company in our list today is Great Eastern Holding Limited (SGX: G07). A major life insurance company in Singapore, Great Eastern is also an important subsidiary of local banking giant Oversea-Chinese Banking Corp Limited (SGX: O39).
The insurer released its 2016 fourth quarter earnings two weeks ago. In the three months ended 31 December 2016, Great Eastern’s gross premium (essentially its revenue) was up 6% year-on-year to S$2.68 billion. Unfortuantely, its profit attributable to shareholders had declined by 11% year-on-year to S$195.2 million.
A decline in the profitability of Great Eastern’s life assurance business and negative changes in in the fair value of its assets had dinged the insurer’s bottom-line.
As for the company’s outlook, Khor Hock Seng, Great Eastern’s chief executive, had the following comments to share in the earnings release:
“Moving ahead, we will continue to strengthen our business model, prudently manage costs and improve operational efficiencies. We will continue to look at innovative ways to enhance our service level and enrich customer experience through digitalisation and analytics. The fundamentals underpinning our business remain strong and we are confident of the Group’s growth prospects in the region.”
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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.