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These 2 Companies Reported Weaker Results Recently

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

We’re more or less at the end of the earnings season.

As is common with every earnings season, there will be some companies posting growth, some companies posting mixed numbers, and some companies experiencing declines. So, which are the companies that have recently reported declines? Let’s look at two of them:

1. Fraser and Neave Limited (SGX: F99) released its 2017 first quarter earnings three weeks ago. As a quick introduction, Fraser and Neave organizes its business into three main segments: Beverages, Dairies, and Printing & Publishing.

In the quarter, the company experienced a 5.8% year-on-year fall in revenue to S$451.3 million. Profit attributable to shareholders fared way worse, however, as it sank by 67.1% to S$3.8 million. The company’s balance sheet also weakened from a year ago; Fraser and Neave had taken on more debt to buy an additional stake in the Vietnam-based milk products company, Vinamilk. As of 8 May 2017, Fraser and Neave controls 18.74% of Vinamilk.

On the company’s plans to drive growth, management said this:

“We remain focused on executing the fundamental pillars of our growth strategy – innovating and investing in our portfolio of brands, strengthening our route-to-market and penetrating deeper into New Markets of Indonesia, Myanmar and Vietnam, which have started to show encouraging performance, while continually sharpening our strategies in core market of Malaysia, Singapore and Thailand, in response to changing competitive and market dynamics to deliver long-term sustainable growth.”

2. Vicom Limited (SGX: V01) is another company that released its 2017 first quarter results three weeks ago. The company experienced a 4.9% year-on-year decline to S$24.1 million in revenue for the reporting quarter. This drove a 6.4% fall in net profit to S$6.9 million.

Vicom is a leading provider of technical testing and inspection services for vehicles in Singapore. The company also provides testing and inspection services for a wide variety of industries.

Management does not appear optimistic about the company’s near term future judging from the following comments:

“Business conditions are expected to remain challenging for the Group. The vehicle testing business will continue to be faced with the high de-registration rate although this will be offset partially by the increase in the number of Certificate of Entitlement (COE) revalidations.

The non-vehicle testing business will continue to weaken with the general slowdown in the industries that we serve.”

Thankfully, Vicom has a strong balance sheet ($107.4 million in cash and equivalents and no debt) which can increase its chances of survival in rough times.

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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.