The earnings season is winding down.
Given that many companies are reporting their results at the same time, it might be useful to categorise them into three buckets: positive, negative and mixed. Today, we will look at two companies that have recently reported negative results.
1. Straco Corporation Ltd (SGX: S85) is the first company that we will look at.
As a quick introduction, Straco is a tourism asset operator with operation in China and Singapore. In China, the company owns the Shanghai Ocean Aquarium, Underwater World Xiamen, and Lintong Lixing Cable Car attractions. Meanwhile, in Singapore, Straco holds a majority stake in the iconic Singapore Flyer – one of the largest observation wheels in the world – in late 2014.
Revenue for the quarter was down by 6.4% year-on-year to S$ 28.3 million. Similarly, operating profit declined by 7.7% year-on-year to S$15.6 million mainly due to the lower revenue. Consequently, net profit attributable to shareholders was lower by 5.1% year-on-year at S$ 10.8 million. As at 30 June 2018, Straco had cash and cash equivalents of S$181 million and total borrowings of S$43 million.
Straco’s Executive Chairman, Mr Wu Hsioh Kwang commented on its latest result:
“We are happy that the Singapore Flyer had resumed its rides operation from 1st April, much to the delight of tourists. Our China operations remained fairly stable for the quarter under review. While SOA’s revenue had declined mainly on the value-added taxes on ticket revenue accounted and paid upfront starting this year, this has been partly mitigated by higher revenue generated by Lixing Cable Car and Underwater World Xiamen this quarter.”
2. QAF Limited (SGX: Q01) is another company that has reported weaker results.
As a quick introduction, QAF is a food production company. The business consist of bakery operations, pork production, food processing and distribution, feed milling, food trading and distribution, food manufacturing, and wine distribution. Some of the prominent brands the company has in its portfolio are Gardenia, Cowhead and Farmland.
QAF’s revenue for the quarter declined 2% year-on-year to S$199.3 million. Net profit declined 86% year-on-year to S$1.1 million. At the same time, operating profit plunged 93% year-on-year to S$0.8 million. The weak performance was driven by weak performance of QAF’s primary production and distribution, and warehousing segments.
QAF had S$102 million in borrowings as at 30 June 2018, up from S$113 million as of 31 December 2017. Cash and cash equivalents stood at S$74million as at 30 June 2018. The company proposed an interim dividend per share of S$0.01.
As for its outlook, QAF provided the following guidance:
“As compared to 1H 2018 and barring unforeseen circumstances, the Primary Production segment is expected to report a weaker financial performance in the second half, whilst the Bakery and the Distribution & Warehousing segments are expected to perform better in the second half.”
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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. Motley Fool has a recommendation for Straco Corporation Ltd.