OKP Holdings suffers big drop in profit on account of margin squeeze

OKP Holdings has suffered a sharp drop in second quarter net profit to $711,000 from $3.1 million.

This was despite a 27.6 per cent jump in revenue to $30.1 million for the three months to June 30.

The infrastructure and civil engineering company attributed the higher revenue to sale recognition from its existing projects as well as newly-awarded contracts.

This was, however, offset by higher cost of works mainly arising from increases in sub-contracting costs, labour costs and additional costs incurred for some sewer-related projects.

Earnings per share fell to 0.23 cent from 1.01 cents previously while net asset value per share eased to 30.13 cents compared to 30.71 as at Dec 31.

Despite higher revenue, margins were impacted by higher cost of works, which increased by 45.9per cent to $54.8 million.

Consequently, the group's gross margin for the first half year fell to 11.8 per cent, from 22.6 per cent in the previous corresponding period.

Gross order book stands at $428.8 million, with some projects completing in 2015.