Here Are 2 Companies That Reported Weaker Results Recently

We’ve come to 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. Singapore Airlines Ltd (SGX: C6L) reported its fourth quarter and full year earnings for its fiscal year ended 31 March 2017 (FY2016/17) in mid-May.

The company likely needs no introduction, given that it runs Singapore’s flagship carrier. But it also has other airline brands, such as SilkAir and Scoot. In addition, Singapore Airlines has a majority stake in SIA Engineering Company Ltd (SGX: S59), a provider of aircraft maintenance, repair, and overhaul services.

During the fiscal fourth quarter, Singapore Airlines’ revenue was unchanged at S$3.72 billion. But, its profit attributable to shareholders fell from a positive S$224.7 million a year ago to a negative S$138.3 million. The company’s bottom-line was affected by factors such as “intense pressure” on passenger yields and a S$132 million provision for “competition-related matters” at its air-cargo business.

Although Singapore Airlines’ balance sheet remains strong, its net-cash position (total cash minus total debt) had declined from S$2.62 billion a year ago to S$1.81 billion. Moreover, its final dividend was lowered by 70% from S$0.35 per share a year ago to S$0.11.

Looking ahead, Singapore Airlines expects continued pressure on yields due to “intense competition arising from excess capacity in major markets, alongside geopolitical and economic uncertainty.” The company also foresee fuel prices “to remain volatile in the near term.”

2. Luxury watch retailer Hour Glass Ltd (SGX: AGS) reported its full year earnings for its fiscal year ended 31 March 2017 (FY2017) in late May.

During the year, the company experienced a 2% decline in revenue to S$696.1 million. This led to a 7% fall to S$48.7 million in profit attributable to shareholders. Thankfully, the company’s balance sheet remains strong – it has S$124.8 million in cash and equivalents and S$51.2 million in borrowings as of 31 March 2017 – so it would be able to tide over any tough times.

Michael Tay, Hour Glass’s managing director, described FY2017 as having “one of the most challenging conditions in recent years.” He added that “some of the negatives like weakening consumer sentiment and spending continued to accelerate.”

In its earnings release, Hour Glass commented on its future. It said:

“Operating conditions continue to remain challenging in key markets like Singapore and Hong Kong, where visitor arrivals remain subdued. Discretionary consumption for luxury and specialty watches remains soft while a glut of inventory continues to persist in the supply chain. These will impact the market for luxury timepieces.

The Group will continue to operate its 40 boutiques across the nine key cities, namely in Australia, Hong Kong, Japan, Malaysia, Thailand and Singapore.”

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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.