Earnings season is winding down.
Given that many companies reported their results at the same time, it might be useful to categorise them into three buckets: positive, negative and mixed. Within this framework, we will look at two companies that have recently reported mixed results.
StarHub Ltd (SGX: CC3) is the first company that we will look at in this article.
As a quick introduction, StarHub is one of the three companies in the telecommunication industry, behind industry leader Singapore Telecommunications Limited (SGX: Z74) but ahead of another peer, M1 Ltd (SGX: B2F).
In StarHub’s latest quarterly earnings update, the telco reported that its revenue grew 3.0% year-on-year to S$582.2 million. However, StarHub’s service revenue declined 1.5% year-on-year to S$459.6 million. Meanwhile, the telco’s EBITDA (earnings before interest tax depreciation and amortisation) declined 9.8% year-on-year to S$147.0 million. Similarly, profit attributable to investors was down 12.8% year-on-year to S$57.0 million. The weaker profitability was due to a lacklustre performance at its Mobile and Pay TV segments.
As of 30 September 2018, net debt stood at S$728.8 million and debt to EBITDA (earnings before interest, tax, depreciation and amortization) ratio stood at 1.22. For context, at the end of last year, StarHub’s net debt and debt to EBITDA ratio were S$632.3 million and 0.98 respectively. StarHub proposed dividend per share of S$0.04 for the quarter.
StarHub’s CEO Peter Kaliaropoulos commented:
“Despite ever increasing competitive pressures, we delivered total revenue of S$1.74 billion reflecting modest growth and S$185 million profit in line with guidance to the market. Whilst our Enterprise business continues to deliver growth in service revenues and customers, we continue to face the challenge of lower mobile revenues from wider customer choice in terms of Sim-Only plans. Pay TV business continues to experience loss of customers to alternative content and packages. We are addressing these challenges including the management of operating expenses.
3Q has been a particularly active period for StarHub. We formed Ensign InfoSecurity; a joint venture company with Temasek Holdings to address the growing opportunities for complex cyber security solutions in Singapore and other markets. We also launched our strategic transformation plan to optimise operational efficiencies, simplify products and drive digitalisation to improve customers experience.”
Bumitama Agri Ltd (SGX: P8Z) is another company that put up a mixed bag of results.
As a brief introduction, Bumitama Agri is a palm oil producer. The company has over 180,000 hectares of plantation land located in three provinces in Indonesia, namely Central Kalimantan, West Kalimantan, and Riau.
In Bumitama’s latest quarterly earnings update, the company reported that its revenue fell by 6.5% year-on-year to IDR 1,919 billion. Similarly, gross profit for the quarter fell by 3.7% year-on-year to IDR 587 billion. Yet, profit attributable to shareholders improved by 1.4% year-on-year to IDR 270 billion. The company recorded lower sales due to a decline in crude palm oil and palm kernel prices which partially offset by production volume of fresh fruit bunches. As of 30 September 2018, Bumitama Agri’s total borrowings stood at IDR 5, 311 billion, up from IDR 4,749 billion at the end of last year. Over the same period, the company’s cash and cash equivalents improved from IDR 217 billion to IDR 245 billion.
The oil palm producer also provided the following guidance on outlook:
“The increase in the supply of palm oil continues to keep palm oil prices low. We do not foresee any changes in palm oil prices in the near future unless there are changes affecting supply and demand dynamics.
The Group anticipates improvement in its production volume to continue into the remaining months of 2018 which will help to mitigate the impact of low palm oil prices. The Group will continue to strengthen its business strategies, improve cost management and increase contribution from newly matured plantations.”
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.