We are reaching the tail-end of the earnings season.
Given that many companies have already reported their results, it might be useful to categorise them into three buckets of positive, negative and mixed.
In this article, I will look at two companies that have recently reported mixed results.
M1 Ltd (SGX: B2F) is the first company that we will look at in this article.
As a quick introduction, M1 is the smallest player within Singapore’s telecommunications industry, sitting behind Starhub Ltd (SGX: CC3) and leader, Singapore Telecommunications Limited (SGX: Z74). M1’s business can be broken down into four segments, namely, mobile services, fixed services, international call services, and handset sales.
In its first quarter results for 2018 (Q1 FY18), M1 reported that revenue was up 0.5% year-on-year to S$254.1 million. The growth in sales was mainly driven by stronger performance in the mobile services and fixed services, offset by weaker performance of international call services and handset sales..
Despite higher revenue, quarterly EBITDA (earnings before interest tax depreciation and amortisation) declined 2.3% year-on-year to S$ 75.4 million. Net profit was flat year-on-year at S$34.8 million.
Karen Kooi, Chief Executive Officer of M1, commented:
“We will continue to strengthen our telco core with enhanced value propositions and customer experience. With our scaled up ICT and digital capabilities, we are well placed to capture the growth opportunities in the Corporate and Government segment driven by corporate digital transformation and Smart Nation initiatives,”
Sembcorp Industries Limited (SGX: U96) is the next company that has reported mixed performance recently.
As a quick introduction, Sembcorp Industries is a conglomerate with three major business segments: Utilities; Marine; and Urban Development & Others. The Marine segment’s contribution mainly comes from Sembcorp Industries’ 61% ownership stake in Sembcorp Marine Ltd (SGX: S51).
Revenue for the reporting quarter improved by 30% year-on-year to S$2.76 billion. The Utilities segment reported a 14% year-on-year increase in revenue to S$1.5 billion. The Marine segment reported 58% year-on-year increase in revenue to S$1.2 billion. Yet, EBITDA (earnings before interest, taxes, depreciation, and amortization) for the quarter fell by 17% year-on-year to S$286 million.
Net profit for the quarter sank by 34% year-on-year to S$77 million. In the reporting quarter, operating cash flow was S$191 million, up from S$118 million seen in the corresponding quarter last year. The improvement was mainly due to improvement from working capital management. Sembcorp Industries’ net debt increased from S$7.1 billion at end-2017 to S$7.3 billion, as at 31 March 2018.
With regards to its Utilities business, Sembcorp Industries said in its latest earnings update:
“Our Utilities business delivered an improved performance in the first quarter of 2018, with net profit growing 27%. In addition, we saw our global renewable capacity grow by 300 megawatts to over 2,400 megawatts in the quarter. In recognition that the world is rapidly transitioning to a low–carbon economy, we recently announced our target to double our renewables portfolio to approximately 4,000 megawatts by 2022 to create one of the region’s leading independent renewable energy players. I am pleased to see us gaining momentum towards achieving our vision.”
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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.