One-off items lead to big loss for Boustead

  • Corporate News
  • Saturday, 29 Feb 2020

In a statement yesterday, the group said bottomline was impacted by impairments at the heavy industries and plantation divisions, amounting to RM844mil and RM176mil respectively. (File pic: A Boustead palm oil plantation.)

PETALING JAYA: BOUSTEAD HOLDINGS BHD undertook a huge kitchen sinking exercise that included large provisions and impairments that was almost equal to the loss it posted for 2019. Stripping out those one-off items, it said the loss for last year would have much smaller from 2018.

In a statement yesterday, the group said bottomline was impacted by impairments at the heavy industries and plantation divisions, amounting to RM844mil and RM176mil respectively.

“In addition, the pharmaceutical division was affected due to recognition of the remaining unamortised pharmacy information system costs amounting to RM247mil This led the group to post a loss before tax of RM1.34bil for the year.”

The on-off impairments, accelerated amortisation and provisions amounted to RM1.3bil in FY19 and was a significant increase from RM262mil in the previous year.

“It was necessary to undertake this to enable the group to move forward with better business prospects. Inclusive of impairments, accelerated amortisation and gain on disposal of land, the group’s loss before tax for 2019 stood at RM1.34bil, a 168% increase from RM498.5mil last year.

“Excluding impairments, amortisation and gain on disposal of land, the group recorded a lower loss from operations of RM128mil, a 46% improvement from a loss of RM236mil in 2018.”

Boustead managing director Datuk Seri Amrin Awaluddin said 2019 was a challenging year indeed for the company, having been impacted by impairments, amortisation and fair value loss.

“Nonetheless, the fact that we continued to see positive growth in revenue augurs well for the group’s various business units and we will continue to build on this momentum.

“Moving forward, we remain focused on our transformation strategy for the group. Conscious of tough market conditions, we are committed to improve the way we do business, with a view to strengthening our prospects over the long-term, ” he said.

Revenue in the fourth quarter dipped to RM2.55bil from RM2.85bil in the previous corresponding period.

For its financial year ended Dec 31,2019, Boustead suffered a net loss of RM1.28bil from RM554.30mil in the previous corresponding period, while revenue was flat at RM10.33bil from RM10.19bil a year earlier.

Boustead anticipates 2020 to be a challenging year, due to the uncertainties of the heightened US-China trade tension, the Brexit consequences and most recently, the Covid-19 virus outbreak that is slowing down the global economy.

“Nevertheless, the domestic economy is expected to grow by 4.8% in 2020, underpinned by resilient domestic demand, particularly household spending following stable labour market and low inflation.

“With this, the group remains cautious of the long-term prospect in delivering sustainable earnings to increase shareholders’ value.”

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