PETALING JAYA: UEM Edgenta Bhd’s 61.2%-owned subsidiary, Opus International Consultants Ltd (OICL) is expecting its Canadian operation to achieve better performance in the second half of this year.
In a filing with Bursa Malaysia yesterday, OICL, which is listed on the New Zealand Stock Exchange, said that the softer market conditions in Canada coupled with the fall in oil and gas prices had negatively impacted the company’s financial performance.
It said that the five months to May 2016, OICL said work in hand in its Canadian Opus Stewart Weir (OSW) has fallen from 47% to 33%, reflecting widespread project deferrals and less new work from clients, resulting in a trading loss of C$5.2mil (RM16.58mil).
Nevertheless, OICL said its management’s “very focused” responses are expected to achieve a better trading outcome in the second half of 2016.
“The OSW business is typically seasonal, with a stronger second half performance.
“The Canadian government’s US$60bil (RM244.86bil) infrastructure package has yet to benefit markets and Alberta has announced an additional US$40bil of infrastructure spending,” OICL said.
Notably, OICL is part of Edgenta’s asset consultancy arm with extensive presence including New Zealand, the UK, Canada and the United States and Australia.
For the first quarter ended March 31, 2016, asset consultancy contributed about 11% of Edgenta’s profit and 56% in revenue.
Meanwhile, OICL said its Australian business has improved compared to last year but has not yet lifted to profitability.
It added that the rest of the group’s business remains positive, including the non-OSW Canadian segment.
“While many aspects of the business have been transformed, markets remain less robust than we would like, and there is both upside and downside in the outlook for the second half of the year,” said OICL’s chief executive officer David Prentice in the statement.
Last week, two Malaysian analysts had reduced their forecast on Edgenta’s earnings partly because on an expectation of slower recovery in asset management division, namely Opus, in Canada and Australia.
Hong Leong Investment Bank (HLIB) said that the Edgenta’s management did not rule out another round of impairment this year if the condition at its Canadian subsidiary OSW does not improve.
In FY15, Edgenta took a RM36mil goodwill impairment on OSW, bringing the goodwill attributed to OSW to RM127mil, HLIB said in a note.