Exposure to ailing contractor for downtown line hurts bottom line of Yongnam

The King Albert Park station construction site on June 24, 2013. Construction group Yongnam Holdings's profit took a tumble despite higher revenue in the second quarter. -- FILE PHOTO: ALPHONSUS CHERN
The King Albert Park station construction site on June 24, 2013. Construction group Yongnam Holdings's profit took a tumble despite higher revenue in the second quarter. -- FILE PHOTO: ALPHONSUS CHERN

Construction group Yongnam Holdings's profit took a tumble despite higher revenue in the second quarter.

Net profit for the three months fell by 28.6 per cent to $8.6 million even as revenue grew by 47.5 per cent to $115.1 million.

Profit was hit by the provision for doubtful debt to the tune of $5.1 million, which is the amount Yongnam had earlier estimated its exposure to Alpine Bau, the main contractor for MRT Downtown Line 2, which became insolvent on June 19.

Excluding the one-off provision, net profit would have been 13.3 per cent higher.

The higher revenue was largely due to contributions from structural steelwork projects which increased by more than two-fold, from $32.2 million to $70.4 million.

On-going projects like the Singapore Sports Hub, National Art Gallery, Suntec City Convention Centre, Market Street and the belt conveyor structure project in Malaysia were the key contributors to the strong performance.

Earnings per share slipped to 0.68 cent from 0.96 cent while net asset value per share firmed to 26.2 cents compared to 25.6 cents as at Dec 31.