It’s earnings season again!
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. In this article, we will look at two companies that have recently reported negative results.
Keppel Corporation Limited (SGX: BN4) is the first company that we will look at.
As a quick introduction, Keppel Corporation a conglomerate with major business segments including Offshore and Marine, Property, Infrastructure, and Investment.
For the quarter ended 30 September 2018, Keppel Corporation reported that revenue was down 20% year-on-year to S$1.3 billion. Similarly, operating profit declined 9% year-on-year to S$ 271 million. As a result, net profit declined by 15% year-on-year to S$226 million while earnings per share (EPS) also fell 15% to 12.4 cents. The lower net profit was due to lower contributions from the investments and property divisions but was offset by a stronger performance in the infrastructure and offshore and marine divisions.
Despite lower profitability, Keppel Corporation’s balance sheet reduced its net debt from S$5.5 billion as at 31 December 2017 to a net debt of S$4.8 billion as at 30 September 2018. Subsequently, the company’s gearing declined to 0.41 times from 0.46 times.
Keppel Corporation has also announced a pre-conditional voluntary general offer, together with Singapore Press Holdings Limited (SGX: T39), to take majority control of M1 Ltd (SGX: B2F) to transform its business, thus allowing the local telco to compete more effectively.
Mr Loh Chin Hua, CEO of Keppel Corporation, commented:
“Keppel continued to deliver strong results in the first nine months of 2018, during which we announced our expansion into new markets and asset classes such as senior living, early education and Australian retail real estate.
More recently, we announced our pre-conditional voluntary general offer, together with SPH, to gain majority control of M1 to drive business transformation and enable it to compete more effectively. We have also announced a scheme of arrangement to privatise Keppel Telecommunications & Transportation.
These are strategic initiatives, would further expand and enhance the Group’s earnings while positioning Keppel for long-term growth”
As it turns out, Singapore Press Holdings is the next company on our list.
As a quick introduction, SPH is a publisher of newspapers such as The Straits Times, The Business Times, The New Paper, Berita Harian, My Paper, Lianhe Zaobao and others. SPH is also in the real estate business and other activities such as events management. As part of the firm’s real estate activities, the firm is the majority owner and manager of SPH REIT (SGX: SK6U), a real estate investment trust (REIT) which owns retail malls in Singapore.
For the financial year ended 31 August 2018 (FY2018), SPH reported that revenue was down by 4.8% year-on-year to S$982.6 million. At the same time, net profit attributable to shareholders fell by 19.7% year-on-year to S$281.1million. The decline in net profit was partly due to the absence of the one-off gain on divestment of a joint venture which was present in FY2017. Excluding one-offs, net profit attributable to shareholders would have improved by 2.4%. As of 31 August 2018, SPH has S$1.6 billion in borrowings and S$359 million in cash, and total assets valued at S$6.2 billion.
SPH proposed a final dividend of S$0.07 per share for FY2018, comprising a normal dividend of S$0.03 per share and a special dividend of S$0.04 per share. Together with an interim dividend of S$0.06, SPH’s total dividend for FY2018 is S$0.13 per share, 13% lower than FY2017’s dividend.
Mr Ng Yat Chung, Chief Executive Officer of SPH, commented:
“Print continues to experience headwinds, but we are seeing encouraging results from our efforts to digitise the core Media Business. We are making good progress in growing our Property, Digital Portfolio and Aged Care businesses, including our recently acquired assets in the Purpose-built Student Accommodation sector.”
Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.
The Motley Fool’s purpose is to help the world invest, better. Like us on Facebook to keep up-to-date with our latest news and articles.
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.