We are in the midst of 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 of positive, negative and mixed. In this article, I’ll look at two companies that have recently reported mixed results.
The first company is Keppel Corporation Limited (SGX: BN4). As a quick introduction, Keppel Corporation a conglomerate with major business segments include Offshore and Marine, Property, Infrastructure, and Investment. For the quarter ended 31 March 2019, Keppel reported that revenue was up by 4.1% year-on-year to S$1.5 billion.
Yet, profit from operations fell by 33.9% to S$321.6 million, driven mainly by lower other operating income. Similarly, net profit attributable to shareholders for the quarter reduced by 39.9% year-on-year to S$202.9 million. The conglomerate’s net debt grew from S$ 5.6 billion at 31 December 2018 to S$8.8 billion at 31 March 2019. This resulted in its net gearing ratio deteriorating from 48% at 31 December 2018 to 72% at 31 March 2019.
Mr Loh Chin Hua, CEO of Keppel Corporation, commented:
“The main pieces of our strategic transformation are in place. Our focus is now on execution. When we have successfully executed on our strategy, Keppel will be a powerhouse of urbanisation solutions, with not only higher profits, but also higher quality, recurrent earnings. We will work all our engines hard towards achieving a mid-to-long term ROE target of 15% for the Group.”
The other company is Jardine Cycle & Carriage Ltd (SGX: C07). As a quick introduction, Jardine C&C is a conglomerate with a diverse set of businesses, with segments such as automotives, financial services, heavy equipment and mining, agribusiness, information technology, and others. These businesses are grouped into three segments, namely Astra International (its Indonesian division), Direct Motor, and Others.
For the quarter ended 31 March 2019, Jardine C&C reported that sales revenue improved 2% year-on-year to US$4.7 billion. Yet, underlying profit attributable to shareholders fell 8% year-on-year to US$201 million. The decline in underlying profit was mainly due to the timing of dividends from Vinamilk.
Similarly, underlying earnings per share (EPS) declined 8% year-on-year to 51 cents. On a positive note, both the Astra and Direct Motor segments reported higher underlying profit attributable to shareholders. As at 31 March 2019, the company’s net debt stood at US$5.6 billion, up from US$5.5 billion as at 31 December 2018.
Jardine C&C’s Chairman, Ben Keswick, commented:
“While Astra’s earnings increased by 5% in local currency terms, the increase in its contribution to the Group was lower due to a weaker local currency this year compared with the first quarter of 2018. Earnings from the Group’s non-Astra interests fell by 22% due to the timing of dividends from Vinamilk. Setting aside this impact of dividends from Vinamilk, the non-Astra interests would have shown 6% growth.
For the rest of the year, Astra is expected to continue to benefit from higher contributions from its financial services and mining contracting businesses as well as its newly acquired gold mining business, but concerns remain over lacklustre demand and intense competition in the car market and weaker commodity prices. The Group’s non-Astra interests are expected to show slower growth.”
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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.