Boustead earnings hit by global oil and gas slump

Full-year net profit falls 55% to $28.2 million while revenue drops 13% to $486.7 million

The depressed slump in the global oil and gas industries sent full-year earnings sliding at engineering services firm Boustead.

Net profit tumbled 55 per cent to $28.2 million while revenue for the 12 months to March 31 came in at $486.7 million, down 13 per cent compared with a year earlier.

The firm experienced a particularly sharp fall in turnover at its energy-related engineering division.

Revenue for the division fell 33 per cent from a year earlier, as global oil and gas companies cut back on spending and investments.

Net revenue for the fourth quarter fell 8 per cent from $122.3 million to $112.5 million, while net profit recorded a worse fall of 87 per cent for the quarter to $1.5 million, down from $11.4 million.

Earnings per share for the year came in at 5.4 cents, down from 12.3 cents from a year earlier, while net asset value was 58.3 cents as at March 31, down from 73 cents a year earlier. The firm is proposing a final ordinary dividend of two cents per share.

  • AT A GLANCE

  • FY2016 REVENUE:

    $486.7 million (-13%)

    FY2016 NET PROFIT:

    $28.2 million (-55%)

    FINAL DIVIDEND PER SHARE:

    Two cents (Unchanged)

Together with the interim ordinary dividend of one cent per share, the total dividend for the financial year would be three cents per share.

Chairman and group chief executive Wong Fong Fui said the firm would persevere through trying times. "We continue to weather the storm, especially in the face of the most unprecedented challenges that the global oil and gas industries have witnessed in recent times."

He noted that all divisions were profitable, albeit at lower levels, and expressed confidence that the firm will weather the rough days ahead.

Mr Wong added: "With our healthy balance sheet, significantly improved net cash position of $165.6 million and untapped $500 million medium-term note programme, we will be able to navigate through this storm and hopefully, bottom-fish along the way."

The company's other divisions also reported declining revenue.

The geo-spatial technology unit's turnover fell 7 per cent to $103 million, mainly due to the significant depreciation of its local operating currencies against the US dollar.

However, Boustead said demand remains firm for the division's products and services across its markets in Australia and South- east Asia. It added that it is looking into merger and acquisition opportunities, highlighting its healthy financial position.

Boustead Singapore shares closed up 0.01 cent at 0.795 cent yesterday.

A version of this article appeared in the print edition of The Straits Times on May 25, 2016, with the headline 'Boustead earnings hit by global oil and gas slump'. Print Edition | Subscribe