Impairments weigh on Boustead, focus on sustainable earnings


  • Corporate News
  • Friday, 29 Nov 2019

Boustead Holdings managing director Datuk Seri Amrin Awaluddin said: “As we strive to achieve a turnaround for the group, we are cognisant of the challenges we face in the current operating environment. We remain focused on enhancing efficiencies and extracting further value within the respective operating units, with a view to deliver sustainable earnings over the long-term.”

KUALA LUMPUR: BOUSTEAD HOLDINGS BHD posted lower consolidated profit before tax (PBT) of RM14mil for the nine-month ended Sept 30,2019, weighed down by impairments in the property and heavy industries divisions.

It said on Friday that it recorded a gain of RM120mil from sale of plantation land. However, its profitability was affected due to one-off impairments in the two divisions totalling RM161mil.

The impairments were on hotel properties and MHS Aviation (MHSA) aircraft and goodwill.

“Excluding the said one-off items and impairments, the group reported a profit before tax (PBT) of RM56mil, ” it said.

Net losses were RM153.10mil compared with RM14.20mil in the previous corresponding period.

Revenue for the period came in at RM7.78bil, which was 6.1% higher than the RM7.33bil in the previous corresponding period.

Boustead Holdings managing director Datuk Seri Amrin Awaluddin said: “Despite headwinds, the group recorded solid revenue growth for the nine-month period.

“However, due to the one-off impairments in the property and heavy industries divisions, our bottom line was impacted.”

“As we strive to achieve a turnaround for the group, we are cognisant of the challenges we face in the current operating environment. We remain focused on enhancing efficiencies and extracting further value within the respective operating units, with a view to deliver sustainable earnings over the long-term.”

Boustead's trading & industrial division recorded a higher PBT of RM120mil compared with RM117mil a year ago, driven by improved contributions from Boustead Petroleum Marketing, which benefitted from higher stockholding gains as well as better margins and sales volumes.

Its finance & investment division posted a PBT of RM78mil, a slight increase from RM77mil a year ago.

“This was mainly due to stronger contributions from Affin Bank, as a result of lower credit impairment losses and higher net gain on financial instruments. The University of Nottingham in Malaysia also contributed positively, although this was partly offset by increased net finance costs and higher share of loss in a joint venture, ” it said.

As for the plantation division, it registered a PBT of RM42mil compared with a deficit last year was primarily due to the gain on disposal of plantation land amounting to RM120mil..

“Nevertheless, the division’s bottom line continued to be impacted by the decline in palm product prices. Average crude palm oil price for the nine-month period was RM2,011 per metric tonne (MT), a 16% reduction from RM2,391 per MT in the same period last year. Similarly, the average palm kernel price for the nine-month period was RM1,179 per MT, a 39% reduction from RM1,924 per MT in the same period last year. Fresh fruit bunches production for the period increased by 10% to 727,771 MT, ” it said.

As for the pharmaceutical division, it recorded a lower PBT of RM34mil compared with RM45mil a year ago. It said while the division registered an improved revenue, its bottom line was impacted by reduced margins.

Boustead said the property division posted a loss of RM68mil, mainly due to impairment of hotel properties amounting to RM43mil.

If the impairment was excluded, the division recorded a loss of RM25mil. While the property development segment recorded better contributions from Taman Mutiara Rini, this was moderated by weaker results from the property investment and hotel segments.

Boustead said the heavy industries division posted losses of RM192mil, as MHSA was affected by impairment on its aircraft and goodwill. The division’s other operating units also continued to be impacted.

It pointed out that excluding the said impairment, the division registered a loss of RM74mil.

While Boustead Naval Shipyard recorded a reduced loss due to better contributions from the littoral mission ship project and unrealised foreign exchange gain, BOUSTEAD HEAVY INDUSTRIES CORPoration continued to be affected by lower contributions from maintenance, repair and overhaul activities and reduced share of profit from joint venture companies.

For the third quarter, loss before tax was RM156mil mainly due to the one-off impairments in the property and heavy industries divisions compared with profit before tax of RM63.80mil a year ago.

Loss after tax was RM155mil compared with net profit of RM7.30mil a year ago. Loss per share was 7.65 sen compared with earnings per share of 0.36 sen.

Revenue increased by 5.1% to RM2.73bil from RM2.60bil a year ago.

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