Singapore Telecommunications Limited’s Underlying Net Profit Plunged 28.4%

Yesterday, Singapore Telecommunications Limited (SGX: Z74), or Singtel, released its 2019 third-quarter earnings update.

The earnings update highlights ten things we think are important for investors to note:

  1. Sales revenue was up 0.9% year on year to S$4.6 billion.
  2. However, EBITDA (earnings before interest, tax, depreciation, and amortisation) for the quarter fell 10.6% year on year to S$1.2 billion.
  3. EBITDA margin was down from 29.0% from the corresponding period last year to 25.7%.
  4. Pre-tax profits from Singtel’s associates was down 32.9% year on year to S$371 million.
  5. Similarly, net profit declined 14.2% year on year to S$823 million. Excluding exceptional items, underlying net profit declined 28.4% year on year to S$680 million.
  6. Free cash flow came in lower, at S$387 million as compared to S$795 million in the same period last year. The lower free cash flow was due to weaker operational performance as well as the timing of ICT milestone receipts and the dividend from Telkomsel.
  7. As of 31 December 2018, net debt stood at S$9.8 billion, and gearing was at 25.2% (a company’s gearing ratio is defined as the ratio of net debt to net capitalisation. Net capitalisation is the aggregate of net debt, shareholders’ funds, and minority interests).
  8. In the latest quarter, revenues for the enterprise and digital life segments were up by 0.9% and 16.7%, respectively, as compared to the same period last year. This was offset by a 1.0% drop in revenue for the consumer segment.
  9. No dividend was declared during the quarter.
  10. Chua Sock Koong, SingTel’s group CEO, made the following comment:

“We have stayed the course despite heightened competition and challenging market and economic conditions. We’ve continued to add postpaid mobile customers across our core business in both Singapore and Australia while making positive strides in the ICT and digital space. We remain focused on investing in networks and building our digital capabilities — areas that are important to our customers and our future success. We will also step up on managing costs, growing revenues and driving efficiencies through increased digitalisation efforts.”

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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.