Boustead posts RM27m net loss in 2Q18

By MARK RAO / Graphic By TMR

Boustead Holdings Bhd fell to a net loss of RM27.6 million for its second quarter ended June 30, 2018 (2Q18), on reduced contributions from the plantation, heavy industries and property businesses.

This is against the RM52.5 million net profit managed by the conglomerate in 2Q17.

Revenue for the quarter slipped 0.8% year-on-year (YoY) to RM2.37 billion, bringing total losses and revenue to RM21.5 million and RM4.62 billion respectively for the first half of 2018 (1H18).

The plantation division posted a pretax loss of RM18.4 million due to the sharp fall in palm product prices and higher operating costs. Turnover was down 17% YoY at RM296.4 million on lower product prices and fresh fruit bunches production.

The heavy industries segment’s revenue plunged 53% YoY to RM340.8 million in 1H18 due to repair projects on the Littoral Combat Ship (LCS), Littoral Mission Ship (LMS), as well as other ships. This resulted in the division ending the 1H with a RM29.5 million deficit.

The property business posted a lower revenue base and a pretax loss of RM18.7 million on lower contributions from property development activities in Taman Mutiara Rini in Johor and hotel operations. Unrealised exchange losses from property investments also hurt earnings.

Both the trading and industrial, and pharmaceutical divisions posted stronger turnover in 1H18 at RM2.4 billion and RM1.1 billion respectively due to higher fuel prices and demand from government hospitals noted by the respective segments.

Going forward, the company expects the proposed RM136 million sale of Malakoff Corp Bhd’s 138.9ha estate land in Penang to uplift the plantation division’s earnings. However, it noted that crop production and selling prices will influence future profitability.

Boustead’s recent acquisition of 11,600ha of land from Pertama Land and Development Sdn Bhd will contribute towards the group’s crop production with palm oil prices expected to pick up in 4Q18.

The latter will be governed by production rates from Malaysia and Indonesia, bio- diesel offtake in Indonesia, demand from India and soybean supplies, as well as the US and China trade tensions.

Progress billings from ongoing and upcoming housing projects will contribute positively to the property division’s bottom line, while the LCS, LMS and other projects will support the heavy industries business.

Boustead declared a one sen dividend in 2Q18, bringing the total dividends declared in 1H18 to 3.5 sen.

Subsequently, it is widely speculated that the company’s group MD Tan Sri Lodin Wok Kamarudin could vacate his position as, part of the current government’s plan to shake-up key government- linked companies and government-linked investment companies’ leadership. At present, Lodin is the CEO of Lembaga Tabung Angkatan Tentera, which owns a 59.39% stake in Boustead.

Lodin was paid RM4.48 million in remuneration as Boustead MD for 2017, averaging out to about RM373,333 a month.