These 2 Companies Delivered Lower Profits In Their Latest Quarterly Earnings

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 recently delivered lower profits? Let’s take a look at two of them:

1. StarHub Ltd (SGX: CC3) reported its 2017 second quarter earnings in early August. Singapore’s second largest operational telco suffered a 1% year-on-year decline in revenue to S$579 million. This eventually resulted in a 21% fall in profit attributable to shareholders to S$85.7 million.

StarHub has a few business segments, namely, Mobile, Pay TV, Enterprise Fixed, Broadband, and Sale of Equipment. The first four are known as Service revenue and they are recurring in nature. Of the four Service revenue components, only Enterprise Fixed managed to grow its revenue during the quarter. Even then, it was just a marginal increase of 0.7%.

Meanwhile, StarHub’s free cash flow fell sharply in the reporting quarter compared to a year ago (from S$137.1 million to S$16.4 million), and its balance sheet weakened too.

Looking ahead, StarHub expects its 2017 Service revenue to “be at about 2016’s level.” The company also expects its overall EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin for the year to be between 26% and 28%.

2. Vicom Limited (SGX: V01) is another company that reported its 2017 second quarter results in early August.

 As a quick introduction, Vicom is a leading provider of technical testing and inspection services for vehicles in Singapore. The company, which is majority-owned by land-transport giant ComfortDelGro Corporation Ltd (SGX: C52), also provides inspection and testing services for a wide variety of industries.

During the second quarter of 2017, Vicom’s revenue was down by 5.2% to S$24.1 million, compared to a year ago. Its net profit consequently fell by 8.3% to S$6.07 million. The balance sheet remains really strong with S$100.9 million in cash and zero debt, but free cash flow for the quarter declined by 4.1% to S$5.2 million. A positive development that happened in the reporting quarter is that Vicom increased its interim dividend by 64% year-on-year to 13.12 Singapore cents per share.

As for its future outlook, this is what the company has to say:

“Business conditions are expected to remain challenging for the Group. The vehicle testing business will continue to face a 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.”

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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.